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LIBRARY 

OF   THE 


University  of  California. 

Received  -vX^»^^<^     ,  iSg}  . 

Accession  No.^S2^f6-       Class  No. 


«: 


t 


PROBLEMS  OF  TODAY. 

TUE       NATIONAL        REVENUES. 


CLEARLY  AND  IMPARTIALLY  DISCUSSED. 


i 


0- 


Ey  Dr.  Richard  T.  Ely,   Political  Econo- 
juist  of  tho  Juliiit^  Uopkintt  Univer:»ity. 

[Written  for  t^e  Baltimore  Sun.l 

ARTICLE  I— INTROBUCTOUY. 

t>avo  been  asked  by  The  Sun  to  write  a 
Series  of  articles  on  various  problems  of 
tlio  il:iy,  some  of  them  relating'  to  national 
life,  others  to  Srato  iiCfairs  and  still  others  to 
our  own  city.  It  gives  me  pleasure  to  comply 
Kivith  this  request,  for  I  reco(rnizo  in  Thb  Sun 
a  journal  of  wi  io  lnfluence,of  intearrity  beyond 
q  lestion  and  of  raio  impartiality  as  between 
the  various  classes  of  industrial  society;  a 
newspaper,  in  short,  conspicuous  for  its  de- 
voUon  to  the  public  weal  and  not  for  its  sub- 
Sf?rviency  to  special  private  and  selfish  inter- 
esi5,  83  so  often  happens  in  these  days.  It  is 
well  that  the  reader  should  at  once  under- 
stand the  character  of  this  proposed  series  of 
articles,  of  which  the  present  istheopaninff 
one.  First,  then.  It;  must  be  borne  in  mind 
that  an  exhaustive  treatment  of  the  subjects 
uisfussed  cannot  be  expected;  that  such  a 
troitment  is  not  contemplated,  for  the  topics 
are  too  lirse  to  admit  of  it  even  within  the 
generous  limits  allowed  ma  by  The  Sun.  I 
intend  rather  to  elucidate  certain  elementary 
principles  in  the  simplest  lauffuaere  at  my 
command,  and  to  make  a  few  sugrgestions  in 
regard  to  such  questions  as  the  na- 
ture of  commerce,  the  balance  of  trade 
theory,  the  policy  of  protection,  its  connec- 
tion With  monopoly  and  lis  beariu>r  on  the 
welfare  of  labor,  the  treasury  surplus,  JetTer- 
sonian  demncrac3',  taxation  in  Sia^eand  city 
and  temperance  reform.  I  shall  not  play-the 
part  of  an  advocate  and  say  certain  things 
merely  because  they  are  calculated  to  pro- 
duce an  effect  or  annoy  an  adherent  of  oppos- 
ing views;  r  it  her,  I  shall  endeavor  to  help  my 
reiders  to  get  at  the  truth  about  many  vexed 
questions  which  are  much  obscured  by  parti- 
san controversy.  Few  statistics  will  be  used, 
because  statistics  both  as  a  science  and  an 
art  j9  siill  in  an  unsatisfactory  condition,  and 
the  data  it  furnishes  are  larerelv  unreliable; 
further,  because  "nothltur  lies  like  figures"— 
in  other  words,  it  requires  a  trained  mind  to 
pass  jtidurment  on  statistical  arguments,  and 
It  is  very  easy,  by  a  sort  of  hocus  pocus,  to 
make  statistics  prove  whatever  you  please. 
Let  us  take  as  an  example  of  fallacies  in  sta- 
tigti.s  one  which  has  carried  great  weigh 
with  it.  Irefertoiihe  argument  about  our 
Increase  in  wealth  end  its  connection  with  a 
protective  tariff,  in  Mr.  James  G.  Blaine's  cel- 
ebraied  letter  in  which  he  accepted 
the  nomination  to  the  presidency  of  the 
United  States.  Mr.  Blaino  states  that 
the  wealth  of  the  United  States  in  ISiJO 
amounted  to  !fU,00O.OO0,O(X»;  that  "after  1S60 
the  business  of  the  country  was  encouraged 
and  developed  by  a  protective  tariff,"  and 
that  at  the  end  of  twenty  years  the  valuation 
of  our  property  had  Increased  to  the  enor- 
motts  agtrr!  r  $44,000,000,000.  An  Enarlish- 

man,  h  ;\  nnui' diatoiy  comeS  forward 

■with  a  s  ju*  to  show  that  there  has  been 

an  equally  marvelous  increa<?e  In  national 
wf^alth  in  his  country  since  1846,  w^Jen  free- 
trade  principlos  were  introduced,  and  ho 
attribute  s  this  prosperity  to  the  policy  of  free 
trade.    Bo  ir  areu- 


lunio   CO    i-..>v.^,>^io.     V,  j.iiu  I  was  walking 
down  Biltimnre  street  yesterday  a  merchant 
sold  ten  thousand  dollars'  worth  of  crooda.   The( 
two  f'V'^-^^   "  "oened  together,  but  was  one 
the  ca  other?    Manifestly  you  want 

some  other  proof  than  the  fact  that  the  two 
events  wero  contemporaneous.    It  is  equally 
necessary  to  atk,  bo'h  In  the  case  of  Great 
Britain   and  the  United  States,  what  other 
forces  besides  tariff  latvs  were  at  work  to  in- 
creasL'  the  wealth  of  each  nation,  and  merely 
to    ask     this     qucsMon    shows    that     these 
law9,  whether  wise  or  unwise,  after  all  played 
only  a  min(;r   r^  le.    The  opening  up  of  new 
territories,  the  improved  means  of  commu- 
nication   and    tiarisportation,    the    further 
application  of  steam  to  industry,  a  host   of 
new  inventions  and  discoveries,  accompanied 
by  a  population  rapidly  growing  in  numbers 
and  increasing  In  intiiiii^enceand  skill— those 
evidently  are  the  main  causes  of  the  aug- 
mented national  wealth  of  the  United  States; 
a!;d  Whether   the  doctrine  of   protection  is 
true  or  false,  the  tariff,  after  all,  was  only 
one  factor,  and  a  minor  one  at  that.    But  let 
U-?  examine  this  statistical  argument  more  at 
length.     Forty-four  billions!    That  is  truly 
an  enormous  sum,  but   bow   much  of   that 
have  you,  ray  reader?    Have  you  more  than 
you  want?    How  many  of  i:p,  in  fact,  have 
enough  to  satisfy  our  rational  wants?    How 
many  of   us  could  advantas?eously    exporui 
more  than  we   have  in  food,  clothintr,   im- 
proved dwellinss,  books,  music,  travel,  whole- 
some  recreation?    Certainly  most  people  in 
my  circle  of  acquaintance;  and  the  question 
may'  well    be    raised     whether    what    we 
have  as  a  nation   is   desirably  distributed, 
and   whether   certain    alarming    teridencles 
to  concentration  of  wealth  and  monopoly  in 
busine, s   are  whotly  unconnected   with  our 
t'ariff  legislation.    Many  more  similar  ques- 
tions are    pertinent,    but    they   will   not  be 
raised  in  this  article,    it  is  hoped   that  what 
has  been  said  will  suffice  to  show  the  neces- 
sity of  caution  in  the  acceptance  of  alleged 
statistical  proof.    Statistics  are   useful,   and 
the  formation  of  an  International  Statistical 
Insiit-uie  to   improve   statistics,   both   as  a 
science  and  prt.  Is  to  be  hailed  with  unquali- 
fied satisfaction,  but  the  place  o^f  figures  in 
a  series  of  articles  like  this  is  limited.    It  is 
proposed  rather  to  b.^se  what  is  said  on  facts 
which  can  bo  observed  by  everybody,  and  on 
principles   of     common     sense      and    well- 
attested  experience.    The  subject  of  national 
revenue  is  the  first  to  occupy  our  atteution, 
because  nearly  all  national  problems  involve' 
sooner  or  later  questions  of  national  finance. 
There   are     various    Bouroes    of    revenue, 
as   land,  productive  enterprises,   loans    and 
taxation,  and  some  local  and  central  govern- 
ments defray  a  large  portion  of  their  expend- 
itures by   profits  on    certain  lines  of  busi- 
ness    entrusted     to     them.        Berlin,      for 
example,  meets  more  titan  eighteen  per  cent. 
of  its   expenses   from    the  net   iMvenues  of 
its  gas  works,  although  gas  is  sold   below  fl 
a  tho:  sand;  the  profits  on  State  railways  in 
the  various  German  States  mora  than  cover 
the  interest   charges  on  their  public  debts, 
and  one  of  these  German  States,  Bavaria,  pro- 
vides for  over  half  her  budget  by  returns  oa 
I  enterprises  of  cue  kind  and  another.    Bich- 
Mond,  Virginia,  and  a  few   other  American 
cities  derive  profits  from  gas  works.      Our 
federal  government,  however,  is  almost;  ex- 

iclusively  dependent  upon  taxes.    But  it  must 
be  remembered  that  taxes  are  of  tw^  kln9l6.  • 
direct  and  indirect,  the  former  on  pli-operty 


JTi. 


LRnd  Income,  the  latter  on  comi 


iS.    The 


jment  are,  how^^ST  exclusively  inJirect 
p  taxes.  We  have  then  to  ask  this  question— 
"What  are  the  peculiar  featured  of  indirect 
taxation  in  greneral,  and  what  SDecial  charac- 
terlsric3  pertain  to  indirect  raxatioh  in  the 
United  States?  An  attempt  will  be  made  to 
answer  this  question  in  the  following:  article. 

DIRECT    AND    INDIRECT  TAXATION. 


How  and  "Where  the  Fedferal  Bardensi 
Fall— By  Professor  Richard  T.  Ely,  of 
Johns  Ht^pkins  Uuiversity. 

[Writtin  for  the  Baltiraore  Sun.l  ' 

JARTICLE  II. 
luuirect  Ta5teah,^y^  tas;es  on  commodities;  in 
other  words,  on  ^^^^5,  ^t  ^^^  ^vear«n^ 
consume  in  other  ways,  OTS#^„n^  ^^..tu^nsls 
and  implements  used  Inmabufacturtogfiroods 
for  purposes  of  consumption.  They  are 
called  indirect  tnxes  because  theyare  usually 
paid  in  the  first  instance  by  one  person  and 
shifted  by  him  to  anciiher.  The  importer  of 
salt,  sugar  and  coal  pays  taxes  on  these  com- 
modities when  they  enter  the  territory  of  the 
United  States,  aids  them  to  the  price  of  his 
commodities,  sells  them  to  some  one  else, 
perhaps  a  wholesale  dealer,  who  in  turn  dis- 
poses of  them  to  a  retailer,  having  added  the 
tax  and  a  profit  on  ihe  money  which  he  ad- 
vanced in  payment  of  the  tax.  The  retailer 
finally  sells  them  to  you  and  me,  but  by  this 
time  the  tax  has  been  turned  over  several 
times  and  hflS  jrrown  like  a  snowball  rolling 
down  hill.  To  the  retailer  tho  tax  has  become 
«n  indistiniruishable  part  of  the  price  which 
he  pays,  and  on  which  he  must  derive  a  profit 
from  us,  the  consumers.  Thus  indirect  taxes 
ft/»i  up,  and  roll  up  every  time  one  person 
shifts  them  up  >u  another,  until  finally  the 
augmented  burden  rests  up  >n  the  phoulder 
of  the  taxpayer.  An  indirect  taxisihus  a 
tax  which  violates  one  of  the  celebrated  four 
Canons  Of  tixation,  for  it  taices  from  the 
pockets  of  the  taxpay.er  far  more  th  in  it  puts 
in!o  the  nublio  treasury.  It  is  a  wasteful 
kind  of  taxation.  This  is  not  mere  theory. 
It  is  a  fact  of  which  any  one  can  satisfy  hlm- 
aeif  by  conversation  with  intellijjrent  mer- 
chants who  understand  the  operations  in 
jD  which  they  are  enirae-ed. 

HTDIRECT   TAXES    VIOLATE    THB    PRINCIPLE 
OF  EQUALITY. 

Another  accepted  canon  of  taxation  is  that 
Its  amount  should  be  measured  in  each  case 
in  proportion  to  ability  or  the  revenue  which 
Hibitizen  of  the  oommnnwealth  enjoys.    This 
if  what  is  called  equality  of  taxation.    Gov- 
ernment should  exact  equality  ol  sacrifices  of 
us  ail.    An  income  tax  honestly,  assessed  and 
honestly  collected,  meets   the   requiremcMts 
of  this   canon.     How    does  the   caso  stand 
ijJth  ittdireot  taxation?    This  is  taxation  of 
consumption;  but  does  consutiiption  of  taxed 
commodities  vary  with  income?    We  Import 
I  ealt  and  tix  it  nearly  fifty  per  cent,  of  its 
I  value.   Docs  the  ricn  man  consume  more  salt 
litban   the   pocjr  man?    Do  you  increase  the 
^amoarit  of  salt  in  your  soup  with  an  improve- 
ment in  your  financial  condition?    It  is  eaid 
that,  on  the  contrary*  the  amount  of  salt  con- 
■umed  by  the  poor  man  isjrreater  than  that 
#on8umed  by  the  rich  mao,  because  the  latier 
uses  other  o jndiments,  while  salt  is  often  the  I 
only  seasonintr  the  former  enjoys.    We  have 
'  I  In  a  tax  like  this  what  is  called  a  retrre^isive 
jj  lax,  a  tax  which   increases   as   income  de-  _ 
'"  ^-eascs— tb2  worst  kind  cf  a  tax  and  the  most  ' 


ijinjust.    The  tax  on  sugar  is  over  seventy- 
,ftve  per  cent,  on  value,  and  from  it  a  lartre 
^>art  of  our  revenue  is  derived.    It  is  similar 
In  principle,  although  there  is  a  difference  in 
rates  accord ing-  to  value  of   sugar,  so  that 
higher  ^rrades  pay  mope,  and  it  is  true  that 
people  of  laree  means  consume  more  than 
poor  people.  But  the  difference  in  rate  and  in 
quantities    consumed    by  no   means   corre- 
sponds to  differences  In  Incomes.    It  may  be 
doubted  whether  a  man  with  ten  thousand  a 
year  consumes    less  than   one  with  fifteen 
thou!=anvi,  and  he  certainly  does  not  consume 
an  inferior  qualty  of  sugar.    4^  man  with 
two  hundred  thousand  a  year  will  not  con- 
sume twenty  times  as  much  as  one  with  two 
thousand  a  year,  much  less  will  he  consume 
one  hundred  times  as  much.    Here  we  still 
have    the   regres-ive   tax.     But   take    even 
taxes  on  silks  imported,  which  yield  fifteen 
millions  a  year,  and  aopear  to  be  one  of  the 
fairest  of  Indirect  taxes.    The  rate  i«  almost 
fifty  per  cent.    Silk  can  hardly  be  called  an 
article  of  superfluous  luxury  at  the  present 
time,  and  a  lawyer  who  supports  a  family  on 
three  thousand  a  year  is  taxed  out  of  all  pro- 
portion   higher   than    the   plutocrat   whose 
income  is  three  hundred  thousand  dollars. 
It  is  needlees  to  continue  illustrations.    With 
the  progress  of  democratic  thought,  the  idea 
of   progressive    taxatic^a    meets— rightly  or 
wrongly,     that     need     not     be     discussed 
here— with   increasing  favor,   and   some  of 
the  States  where  the  principles  of  deiusicracy 
are  carried  farther  than  anywhere  else  in  the 
world,  the  Swiss  cantons,  have  recently  in- 
troduced progressive  taxes  on  property  and 
on  income,  but  our  federal  government  relies 
wholly  on  a  system^of  reercssive  taxatlonl 
One  would  think  this  in  itself  would  be  suffi- 
cient to  check  the  ardor  of    protectionists 
who  are  at  the  same  time  workingmen:  but 
this  is  by  no  means  the  whole  story.    Take  up 
any  treatise  on  taxation  and  read  the  argu- 
ments  in    favor  of   Indirect   taxation,    and 
what  is  ihe  first  thing  to  attract  your  atten- 
tion?   it  is  that  with  the  present  calls  upon 
civilized  governments,  and  with  the  unwill- 
insfness  of  people  to  pay  direct  taxes,  and  the 
resistance  which  men  of  means  offer  to  high 
direct  taxes  in  proportion  to  income,    it  is 
practically  impossible  to  maintain  the  modern 
gyvernraent     without    large     contributions 
from  people  of    limited  njsource",  and  the 
only  way  to  tax  them  is  by  indirect  methods; 
in  other  words,  mincrling  taxes  with  prices 
paid,     so     that    goods    cannot    be     bought 
without  paying  taxes.     It  is.  too,  worthy  of 
notice  that  the  English  system  of  Indirect 
taxation  which  we  have  inherited  originated 
in  the  corrupt  re^  trf  Charles  II,  about  two 
hundred  years    ago.     Then   the   burden    of 
government  rested  unon  the  land  held  by 
feudal  tenure,  but  the  Parliament  of  Charles 
II,  "by  a  majority  of  two  only,  divested  the 
Inndedgentry  of  all  their  feudal  obligations 
to  the  crown  without  touching  the'.r  privi- 
leges, and  as  compensation  to  the  State  im- 
posed an  excise  duty  upon,beer,  spirits,  wine, 
tobacco  aud  numerous  other  articles.   *    *    * 
It  marked  the  dawn  of  our  modern  system  of 
indirect  taxation;  and  the  emancipation  of 
the  aristocracy  from  special  burdens  on  land 
thus  accomplished  helped  to  alter  the   whole 
current  of  our  later  fiscal  history."     These 
are  the  words  of  an  English  writer  on  flna'.ice. 


H 


I 


^s,-^ 


INUIKKUT  TAXATION   AND   PAUPERISM 

There  is  a  connection  between  indirect  tax- 
ation and  pAuporiam  which  Is  worthy  of  nc- 
tice.  All  direct  taxarion  places  a  limit 
beyond  which  it  will  dqj  eo.  This  Is 
too  low  In  Maryland— at  %ny  rate  lower 
than  elsewhere— but  •  evert  with  us  a 
man  muat  have  at  l.aist  a  hundrel 
dollars  to  be  taxed.  Indirect  taxation  does  not 
discriminate  between  the  last  dollar  of  the 
poor  widow  and  the  dollar  which  is  only  one 
in  an  income  of  a  million.  It  raises  prices, 
reduces  the  value  of  incoiOe,  and  forces 
some  who  are  already  near  the  awful  line  of 
pauperism  to  cross  it,  and  thA«  puts  to  death 
hicrher  aspirations  in  a  class  of  citizens  and 
lowers  the  level  of  civilization.  But  the  ab- 
surdity of  the  thlnar  is  seen  in  this,  that 
when  the  tax  has  destroyed  the  value  of  a 
man  as  an  industrial  factor  in  the  community, 
what  has  been  taken  away  is  given  baokin 
alms! 

INDIRECT  TAXES  OBSTRUCT  TRADE. 

The  cost  of  collection  of  indliect  taxes  is 
hiarh,  and  necessitates  an  army  of  spies  and 
linformers.  They  thus  interfere  with  liberty 
'  of  movement  and  obstruct  trade  in  a  thousand 
ways.  Thus,  asaln, indirect  taxes  take  out  and 
keepout  of  the  pockets  of  the  people  more 
thati  they  yield  to  the  treasury  of  the  State. 

INDIRECT  TAXES  CONGENIAL  TO    DESPOTISM 
AND  ARISTOCRACY. 

Indirect  taxes  are  imposed  on  people  with- 
out creatine:  so  much  discontent  as  direct 
taxes  and  without  so  close  a  scrutiny  of  the 
method  in  which  the  proceeds  of  taxation 
are  expended,  because  the  mass  of  men  do 
not  realize  that  they  pay  taxes  every  time 
they  purcbaee  dry  jfoods  or  firroceriea.  They 
are  an  underhanded  kind  of  taxation.  It  is 
not.  then,  surprising  that  they  are  in  the 
minds  of  many  identified  with  despotism  and 
aristocracy,  while  there  is  a  firrowinjj  opposi- 
tion to  them  on  the  part  of  enlisrhtened  de- 
mocracy—an opposition  which  undoubtedly 
troes  too  far ^t  times.  In  the  Unite  d' States 
itshould  be  rememered  that  while  national 
revenues  flow  from  Indirect  taxes.  State  and 
local  srovernments  are  almost  entirely  sup- 
ported by  direct  taxation.  National  revenues 
are  about  as  largre  aa  the  revenues  of  all  the 
States  and  all  the  local  political  units  put 
together,  so  that  we  pay  about  one-half  of 
our  total  expenses  of  government  by  the 
proceeds  of  direct  taxes  and  about  one-lialf 
by  the  proceeds  of  indirect  taxes.  There 
would  be  great  opoosition  to  an  extensive 
system  of  direct  federal  taxes,  because  the 
face  of  the  federal  taxgatherer  in  our  States 
is  not  a  welcome  sight.  Of  course  he  Is  now 
everywhere,  but  he  keeps  out  of  sight  of 
moat  of  us,  and  so  we  do  not  realize  it. 
A  jrood  deal  of  this  feeling  against 
direct  taxes  has  been  properly  called 
"puerile,"  and  among  a  people  suflGlciently 
jfDoral,  patriotic  and  enliurhtened  Indirect 
taxation  mignt  perhaps  be  abolished.  We 
must,  however,  take  people  as  we  find  them, 
and  at  present  its  total  abolition  is  out  of  the 
question.  Of  course  it  is  an  undoubted  ad- 
vantage to  be  able  to  pay  one's  taxes  in  small 
amounts  from  time  to  time,  when  one  buys  a 
few  pounds  of  sucrar,  a  little  tobacco  or  an 
article  of  clothing.  Our  Indirect  federal 
taxes  are  of  two  kinds,  tariff  duties  and  in- 
ternal revenue  taxes,  the  former  laid  oa  i 
commoditi 's  Irnnorif* i^  into  the  Country,  the  ' 


latter  on  cornmoditles  pt^ilfliced^Wfcuin  tlio 
country.  Now  there  Is  a  peculiarity  about 
the  revenues  which  flow  from  taxes  on  im- 
ported commodities,  and  that  is  that  those 
taxes  are  In  the  tJnited  States  not  laid  for 
the  sake  of  revenue,  but  for  quite  another 
purpose.  The  aim  of  the  tariff  taxes  is  to 
render  it  n  Ticult  to  bring  commodities 

into  the  U.  _  :?tati'8,  and  thus  either  to 
remove  competition  from  those  Americans 
engaged  io  ine  production  of  commodities 
which  some  of  us  want  to  Import,  or  at  any 
rate  to  serve  as  a  breakwater,  and  to  modify 
the  power  of  coinnetitlon.  The  revenue 
which  tnese  taxo3  afford  is  merely  an  Inci- 
dental matter.  The  ptjrpnso  of  the  next 
article  will  be  to  consider  certain  peculiar 
features  in  our  flnanciai  situation,  caused  by 
j  thefnct  that  taxes  are  laid  on  cummodiiies 
for  ottier  than  revenue  purposes. 


PROBLEMS  OF  TODAY. 


SUKFLUS    IN    THE     TKEASURi. 


THE      INTERNAL     REVENUS     TAXES. 


Frot.  Richard  T.  Ely,  mf  Johns  Hopkina 
University,  or  Internal  aad  Tarifif  Tax* 
ation — Their  Comparative  31©rlt«. 

LWrilten  for  the  Baltimore  Sun. I 
ARTICLE  III. 

The  principles  which  should  control  public 
expenditures  differ  in  marked  manner  from 
those  which  should  g'ivern  private  eip^Mul- 
itures,  and  the  failure  tu  recogtiize  this  fact 
explains  many  mistakes  wnich  have  been 
made  in  Atnericat*  flmtncial  h  sr-rr.  It  is  not 
nei-essary  in  this  place  to  eiabor  te  all  the 
differences  between  private  flnai.eio  ing  and 
public  flMiiiicicTintr,  bu'  in  any  discu:«<ion  of 
currdBt  financial  problems  one  should  be 
clearly  erraspcd.  It  is  this:  Private  expend- 
itures sb'juld  bd  govcriied  by  revenues,  while 
Id  the  case  of  a  public  body  it  should  flr.-it  bo 
determined  what  one  wants  to  spend,  ana 
then  receipts  should  be  made  t«  corr*  spond 
to  public  needs.  The  private  man  brings  his 
receipts  up  to  the  hiahest  point;  in  othT 
wordt,  tae  endeavors  te  obtain  as  large  a  profit 
from  his  business  as  possible,  or  to  derive  as 
large  an  income  from  his  occupation  as  cir- 
cumstances will  permit.  After  he  has  foutid 
that  his  income  i»  $500,  $1,000  or  $5,000,  as  the 
case  m«y  be,  he  then— and  if  a  prudent  man 
not  before— decides  what  he  can  spend. 
Unlike  a  private  party,  th«  representatives  of 
the  people  ought  first  to  decide  that  it  is 
necessary  to  spend  certain  sums  of  money 
for  the  public  good,  and  then  ask  the  people 
to  provide  the  means,  layine  taxes  to  meet 
expenses;  or,  if  part  of  expenses  are  de- 
frayed by  profits  on  pihlic  wiTk  and  other 
sources  of  revenue,  laying  taxes  to  meet  the 
deficii  ncy  in  reoeiots.  This  U  a  well-  ested 
principle  of  pub:lc  financiering.  Strict 
adherence  to  this  principle  brings  order  and 
harmony  ij^to  public  accounts,  while  Its 
violation  oroduoes  confusion  and  waste.  It 
implies  that  taxes  are  laid  for  revenue 
purposes. 

Wheu  we  begin  an  examination  of  oui*  fed- 
eral finances  we  are  struck  \ij  the  dispropor- 
ilou  between  the  needs  of  government  and 
(ho  revenues  for  meeting  these  needs.  Some- 
times the  revenues  are  too  la  rare  and  some- 
times too  small,  and  when  it  is  noticed  that 
they  are  apt  to  be  plentiful  when  there  Is 


oo^ilifiraitiveiy  8aj.<,;i  call  for  expenaiturei?, 
and  distresglnpiy  safeSiil  when  our  needs  are 
,  larcre  and  urgent.  It  ]a  a  not  unnatural  <5on- 
j  elusion  that  there  Js  a  radical  defect  incur 
I  financial  system.    Such  is  the  case,  and  the 
'  defect  is  the  on©  mentioned,  that  taxes  are 
not  laid   for  revenue  purposes.    When  taxes 
are  Imposed  upon  a  people  to  defray  the  ex- 
peuaes  of  government,  it  will  be  flsoertained 
what  those  expenses  properly  are,  and   the 
rare  of  taxation  wiil  bo  so  adj  ist«d  as  to  raise 
enousfb  monoT,  neither  more  nor  less.    This 
is    the    plan    pursued    by   the    mayor    and 
council    of    Baltimore,    and    the    tax    rate 
is  designed  lo  vary,  and  to  be  $1  50,  $1  60  or 
$1  70,  accord inar  to  our  actual  needs.    It  can 
readily    b«    seen,  howuver,    that    the     mo- 
ment one  losea  sisht  of   the  objoct  ^f  tax- 
ation, which  is  revenue,  and  iayj  taxes  for 
other  purooses.it  would  be  surorisinif  if  reve- 
nue should    correspond    vvith  the  need   for 
reverjue.    That  there  should  be  this  corre- 
spondence implies  not  only  that  taxes  should 
be  laid  with  a  view  to  the  probable    revenue 
from  them,  but  that  the  system  of   taxation 
itself  shoulci  be  a  flexible  one  In  at  least  some 
of  Its  essential  prints,  8)  that   revenue   may 
readily  be  lowered  or  raised  without  an  acute 
disturbance  of  business  relations.    The  Eog-- 
lisheovernraent  finds  flaxibility  in  its  Income 
tax,  which  is  raised  or  lowered  from  year  lo 
year,  according  to  estimated  revenues  from 
other  sources  and  estimated  expenditures.  If 
it  is  required  to  raise  larg-e  sums  for  the  pros- 
ecutiou«©f  a  war.  the  proper  minister  at  onoo 
brings  a  bill  into  Parliament  to  raise  the  rate 
of  the  income  tax.    Gla  Istonc  oriffinally  in- 
tended to  defray  all  the  expenses   of     the 
Crimc^aa  war  by  taxation  without  loans,   and 
Parliament,  with  that  end  in  view,  raised  the 
income  tax  considerably.    This  involves   no 
disturbance    of  busiuess  relations,  for  it  is 
not   a    tax   on    business   or    property,     and 
It     requires    much     only    of     those     who 
have    much  to  srive.    Thus,   entirely   apart 
from   the  fact   that  this   method  makes  the 
i^fluoutial  classes  feel   their   respoaslbility 
for  th6  course  of  flrovernment,  this  English 
iHCorao  tax,  so  far  as  it  sroes,  assures  a  condi- 
tion of  sound  public  financierinsr.    It  is  not 
meant  in  t&is  place,  and  at  this  timp,  te  raise 
the  question  of  the  desirability  of  an  income 
tax.    Even  the  friends  of  an  income  tax  are 
vprv  properly  inclined  to  regard  it  as  better 
adoDtea  to  State  than  Federal  purposes,  but 
what  is  said  illustrates  my    point,    namely, 
that  it  is  necessary  to  establish  a  system  of 
taxation     which     in     some     of     its    parts 
at    least     shall     be     flexible.    Now,    ir     is 
manifest     thut     our     federal     government 
never  has  had  a  system   of  taxation  which 
answered  the  requirements  of  national  finan- 
cierinsr.   Our  chief  soutca   of   l-eveoue  has 
been  taxes  on  imported  commodities.    When 
are  those  likely  to  yield  larsre  returns?  Mani- 
festly duriuar  time  of  peace  and  prosperity. 
When  are  they  likely  to  yield  little?    Mani- 
festly duriner  periods  of  foreisro  complications 
and  wars.  But  it  is  durinjf  periods  of  the  first 
sort  that  we  need  litile,  ansd  durinjf  periods  of 
the  second  sort  that  we  need  mucb.    Twa  pe- 
riods la  our  history  are  specially  instructive 
on  this  point,  and  these  are  the  periods  cov- 
ered by  the  war  of  1812  and  the  lato  civil  war 
Mr.  Gallatin  was  forced  to  rely  upon  loans 
durinff  the  first  war  and  these  could  be  placed 
o6lj  under  disadvantajreous  conditioas  for 
the  public,  becausa  there  was  no  adequate 
basis  for  them  in  pjiblio  reveniv-a,  for  thos9 


coBSisted  of  duties  on  i mpor ted^com mo 1 1 
and  tho  war,  which  called  for  increasefj  ex- 
penditures, diminished  imports.    Mr.  Dallas, 
in  1814,  said:  "The  plan  of  finance  which  was 
predicated  upon  the  theory  of  defraying  the 
extrp.ordinary  expenses  of  the  war  by  suo- 
cesalvo  loans,  had  already  became  inopera- 
tive," and  he  ascribed  the  collapse  "to  the 
inadequacy  of   our  system   of    taxation    to 
form  a  foundation  of  public  credit,  and  the 
absence  from  our  system  of  the  menus  which 
are  the  best  adapted  to  unticipste,  collect  and 
distribute  the   public  rerenue."    Mr.  Dallas 
uses  the  followiner  instructive  words  in  his 
"Eeport  ©n  the  Finances  for  1815:"  "It  cer- 
tfiinly  furnishes  a  lesson  ©f  practical  policy 
that  there  existed  no  system  by  wdicli  tbe 
internal    resources    of    the    country    could 
be    brought     at    once    into    action     when 
the    resources    of    its    external    commeroe 
became    incompetent    to    answer   tho    exi- 
irercies      of      the     time.      The     existence 
of  such  a  system  would  probably  have   In- 
vijTorated  the  early  movements  of  the  war, 
might  have  preserved   the  public  credit  un- 
impaired,  and    would   have    rendered     the 
pecuniary  contributions  of  the  people  more 
equal  as  well  as  more  effective.    But  owint? 
to  the  want  of  such  a  system,  a  sudden  and 
almost  exclusive  resort  to  the  public  credit 
was  necessarily  adopted  as  the  chief  instru- 
ment of  finance," 

It  seems  Si-arcely  necessary  to  remind  the 
readers  of  Thb  Sun  of  the  results  of  the 
fiuancial  policy  of  the  late  war.  Secretary 
Uhase.  in  his  first  report,  in  1861,  estimated 
revenues  from  customs  duties  at  557,000.000, 
and  at  the  end  of  the  first  quarter  found  it 
necessary  to  reduce^the  estimate  to  132,000.- 
000.  There  existed  no  system  "by  which 
the  Internal  resources  of  the  country  could 
atoncebebrouKht  Into  action,"  and  before 
this  machinery  could  be  created  and  ren- 
dered efifective,  the  war  was  nearly  finished. 
Tho  result  was  a  vast  and  demoralizius?  public 
debt,  on  part  of  which  it  was  necessary  to 
pay  tjrelve  per  cent,  for  money  received,  and 
return  $100  in  gold  for  $50  lent  to  eovern- 
ment;  further,  the  creation  in  time  of  haste, 
confusion  and  dire  need  of,  a  tax  system, 
which  may  be  called  a    monstrosity. 

Our  tax  sj'stem  now  yields  surplus  revenue, 
and  it  is  dilficult  to  reduce  it  because  it  is 
framed  fer  the  benefit  of  private  interests, 
and  these  resist  its  reduction.  "The  full  real- 
ization of  self-srovernment  requires  a  delicate 
adjustment  of  tudfiretary  machinery,  but 
surplus  revenue  acts  as  a  weight  which 
throws  that  machinery  out  of  balaixie." 
These  words  are  from  H.  C.  ^dams*s"Public 
Debts,"  as  able  a  work  on  finance  as  has  ever 
appeared  from  the  pen  of  an  American. 

Now  it  is  not  true  that  this  surplus  revenue 
could  not  be  advantageously  expanded. 
Thore  are  many  uses  U  which  it  could  be 
put  which  would  be  hiffhly  heneficial.  Pos- 
sibly some  of  them  will  bo  raemioned  here- 
ttfter.  It  is  not  pleasant  to  pay  taxes,  but  it 
may  ha  doubted  if  the  ordinary  mun  invests 
any  money  which  yields  so  laicre  a  reti;rn  as 
that  which  ho  pays  in  taxes,  provided  always 
that  it  is  expended  hy  honest  and  intelJiiifeut 
public  officials.  This  is  often  not  appreci- 
ated because  there  is  to'>  canoral  a  failure  to 
recognize  what  is  due  to  i?ood  srovernment. 
(But  the  moment  the  macriiiu>ry  of  urovern- 
mentbesrins  to  move  unsat  sr.iciorily  or  ex- 
_y.bltJl&r38  of  breaklnjr  down,  even  tiie  most 


\ 


oonflrmed   tax   dodders   do    not  liesi'ate    to 
utter  crl9a  of  alarm  and  indifrnation.  I'crhaps 
the  anarcbistio  aeitation  has  don«  8om«  irood 
in  callinp  attention  to  the  importance  of  good 
KOTernnient.    Mayor  Latrobo,  It  •ccurstorao 
In  this  connection,  made  an  excellent  polntin 
bis  recent  address  before  the  West  Baltimore 
Improvement  Association.    He  admitted  tha 
burden  of  taxation,  but  put  tho  question, 
"Does  any  one  regret  the  issuintr  of  a  ainifle 
loan  made  heretofore  for  public   Improve- 
ments, such  aa  the  Gunpowder  water-works, 
the  new  City  Hall,  Druid  Hill,  Patterson  and 
Hiversido  Pjirks,  the  opeuina:  of  Cathedral 
and     German      streets?"      This      la     true, 
and    it    is    doubtless    true    hat    the    needs 
of  the  United  States  goyernraent  m^iy  la  the 
future  require  enougrh  more  than  now  to  con- 
sume all  our  present  annual  surplus,  for  Sec- 
retary Fairchild's  report  shows  that  the  ordi- 
nary  federal   expoaditiircs   increased    over 
thirty  millions  from  1884  to  1887,    yet  it  is 
also  true  that  in  a  matter  like  this  we  ougrnt 
not  to  proceed  faster  than  is  warranted  by 
the  enlightenment  of  public  opinion.    This 
skould  crystaiize   about  a  measure  ana  dt  - 
mand  it  before  revenues  ^or  carrying  it  into 
effect  are  provided.   To  provide  revenues  be- 
fore it  ii  decided  for  what  we  need  them  is 
wuttinir  the  cart  before  the  horse.  The  surplus 
revenue  could  be  uaef  uiiy  expended.but  there 
is  every  reason   to  fear  that  it  will  not  be. 
Rather  than  inaugurate  any  public  work  de- 
iiSfned  to  benefit  the  entire  public,  but  which 
is  not  as    yet    demanded    by    tho    public, 
timid  Congressmen  are  more  likely  to  erant 
money  to  clamorous  private  interests,  with 
the   idea  of  wlnuinar  their   support.    More- 
over, such  a  public  measure  as  the  appropria- 
Uoa  of  public  money  for  the  removal  of  illit- 


I^AWS  TO   KJ  Git  A 1 :    t5>lSlEircE. 


©roy— one  of  the  dansrerf  to  the  republic— 
cannot  be  discussed  on  its  merits  so  long  aa 
an  enormous  surplus  exists.  Its  advocates 
are  suspected  of  improper  motives,  very 
likely  of  trying:  to  ret  rid  of  the  publio 
money  to  bolster  up  war  taxation,  and  It 
fails  to  rooelvte  the  fair,  impartial  discussion 
which  it  deserves.  Let  ao  one  take  this  as  an 
pxpressioa  «f  apprwral  for  the  so-called 
"IJlair  Uill."  it  is  simply  uso«l  as  an  Illustra- 
tion to  sh  w  the  difficulties  which  attend  even 
the  discussion  of  any  nopuiar  mea«»ure  j»olonar 
as  our  present  methods  of  financieriuff  ooa- 
tlnue. 

Aa  it  in  seen  that  durlpg  on  imports  are  not 
Batl^ifactory  as  an  exclusive  source  of  federal 
reve  lUfs,  and  can  only  formniart  of  a  system 
of   federal     taxation,    the    question    arises, 
what    have     tho«e     to     offer     as     a    sub- 
stitute    who    wish    to    ab  Ush     our     pres- 
ent   Internnl    rfveniie    taxes?     Unless    the 
revenue  reformers  k(*«p  these  various  points 
in    mind  they   are   likely   to  be  outwitted. 
i  Tho  ten  per  cent.  taritT  re  luction  of  1873  was 
repealed  iu  1875  on  account  of  deflolonoy  of 
revenues,  and  if  there  is  nothinfrto  take  the 
place  of  internal  revenue  taxes  and  they  are 
abolished,   ©very    future    fiscal    emertroncy 
i   will  serve  as  aa  effective  pit  a  forablirher 
I  tariff.    If   we  desire  once  for  all   to  broak 
with  ont-hlffh  and  complicated  tariff  system 
\  to  avoid  flnanclerintr  of  such  a  nature  as  to  pro- 
duca  violent  fluctuations  in  businesa  affairs 

I  and  to  brl'isr  business  down  to  a  natural  basis, 
we  mui^t  be  prepared  to  maintain  and  estab- 
lish a  sva'em  of  taxation  cHpablo  of  meettnj? 
'  the  varyinif  demands  on  tho  public  treasury. 


^The  Nature  and  Purposes  of  Comnaerce  \ 
Discust^ed  by  Prof.  Ri«'hard  T.  Klj,  of  ' 
Johns  Hopkins  University. 

I'vVriLton  for  the  Baltimore  Sun.] 

ARTICLE  IV. 

The  design  of  our  present  tariff  laws  is  to      f 
re^ulnte  comm*  ree,  and  they  are  ba*^od  on  a     i? 
certain  theory  re-  peoting  the  nature  and  pur- 
pose Of  commerce.    This  fuel  should  be  fully 
grasped,  for  no  on«  is  qualiflod  to  spoik  on 
protection  and  free  trade  who  ha^    not  clear 
ideas  in  regard  to  the  part  which  commerce 
plays  in  modern  iadusirial  llfe.Thofree-tradcr 
finds  favor  with  tho  mercantile  community 
because  he  looks  upon  an  extension  of  com- 
tnorcial  relations  with  satisfactlon.and  thinks 
that  restrictions  anri  rearUaiions  of  commerce 
do  more  harm  than  good-    Wh'^n  an  ancient 
French  monarch  calltsd  an  opulent  merchant 
to  him  and  desired  hi^s  adviue  in   reerard  to 
measures  suitable  for  the  extension  of  com- 
merce,     the      merchant     simply      replied, 
"Lalssez    faire,"    which,     interpreted     into 
plain    English,    means:   "Lot    U3   the   mer- 
chants     alone.     We     ask     noihinsr     more, 
^To  ask  no  assistaice.    We  only  desire  that 
you  should  not  interfere  with  ug."    It  was 
then  qu.te  natural  that  an   early  American 
free-trader— Con  d  7    Rasrnet— who,    in    1839, 
published  the  once  well-known  "Free-Trade 
Advocate   and   Journal    of   Political    Econ- 
omy," should  take  fis  the  motto  of  his  peri- 
odical "Laissez  nous  faire."    Tho  protection-     * 
ist,  on   :he  other  hand,  looks  with  distrust 
up<)U  foreitrn  commerce,  for  he  fancies  that 
the  interests   of   the   home    producer   may 
thereby  be  eedamrered.    He  therefore  advo- 
cates restrictions  upon  commerce    that   he 
raaydimloHh  it;*  aaasfnitude.  Occasionally  one 
is  even  found  who  wishes  that  a  wall  of    fire 
surrounded  the  United  Si  ate*,  so  that  nothing 
miiTht  be  import^ad.    Coupled  with  the  appre- 
hensions concerniutr  the  home  producer  one 
fr^queutly  finds  disparaging  views  ooncern- 
inif  the  real  utility  of  commerce.    These  are 
partly  traditional,  and  are  found  from  the 
earliest  times  to  the  present.    The  ancient 
Persians  held  commeroo  to  be  a  school  of  lies. 
Cicero  and  the  Roman  philoaophars  despised 
commerce,  Cicero  golr;fir  3>  far  as  to  say  a 
merchant  could  never  make  anything  unless 
1  he  lied  in  the  moat  atrocious  manner.    St. 
Chryaostom  believed  it  scarcely  po^ible  that 
a  man  could  be  at  the  same  time  a  Christiaa 
aad  a  merchant. 
I      There  can,  I  thinK,  soaroely  be  a  doubt 
that  the  itilluence  of  theay  old  views  lingers 
'  on  after  commerce  has  changed  materially  its 
mature.    Fv  rraerly  commerce   originated  in 
robbery,  and  it  supplied  chieflv  articles  of 
iyxurr.    The  Phc9  licians  and  Greeks  were 
;  pirates   before   they   were   meifobaats,    and 
piracy  played  an  important  role  in  the  de- 
velopment of  Engrlish  commerce  in  the  six- 
teenth century.    Nomadic  people  first  robbed 
caravans,  and  onlv  at  a  later  period  became 
<j:uide8  and  protectors  of  them,  and  thus  as- 
sistaatet  in  the  oreat ion  of  a  legitimate  oom- 
raerce.    Piracy  and  robbery  are   no   longer 
kids,  but  only  enemies  to  commerce,  whicli  is 
uow  found  on  the  side  of  law  and  order. 

An  error  of  a  different  sort  is  still  unduly 
current.  It  is  that  commerce  is  not  produc- 
tion. Benjamin  Franklin  said  there  are  three 
ways  for  a  nation  to  icquiro  wealth:  "The  first 


J 


d  by  commerce,  which  is,  generally.  ' 
j  cheatiuff.  The  third  is  by  agrriculiure,  the  [ 
r  ouJy  bonf'«t  way."  Tbe  late  Horace  Greeley  ' 
i  used  to  lameut  ia  bis  Tribune  the  larffe  num-  ! 
j  ber  of  raerchaats,  and  to  hope  that  the  time  j 
would  come  when  ninety-nine  men  out  of  a  ' 
hundred  would  becomo  real  producers. 

The  truth  ie  that  the  merchant  is  as  truly  a  ' 
producer  as  the  farmer.    The  farmer  creates 
no  new  matter.    No  one  can   do   that.    He 
simply  changes  the  position  of  things;  puts 
thiciirs  in   fit  places,  and  thus  adds  to  their 
utility.     He  drops  the  corn    In    the    hill— 
chanfires    its    place— puts    it    in    the    rlcht 
pi  ce.    He  chaofiTos    the  .position  of  earth, 
putiingr  it  over  the    corn.     The    corn    ia 
acted  upon  by  natural  forces.    Certain  eie- 
menta  in  the  earth,  air,  water  change  their 
pdsItioBs,  and  form  new  combinations.    The 
eorn  er«w?,  and  what  was  useless  becomes 
useful.    The  farmer  has  chftnared   the  posi- 
tion of  thin?8  and  created   utility  or  a  Quan- 
tity of  value.    That  is  all.    No  more  than  the 
morchant  can  ho   add    one   particle   to  the 
quantity   of    matter   In    the   earth.      Now, 
under   the   direction   ef  the   merchant,  the 
position  of   thiBfrs  is  chanared.     Goods   are 
brouifbt  from  a  place    whepo  tfaey  are    not 
needert,  and  v*^^her»  f  hey  could  hare  no  value, 
to  a  place  where  they  «re  needed.    Thus  the 
Merchant  crt  at»g  pr»«l80ly  what  the  farmer 
ereat/s:    ttaraely,   a   qusuilty   of   utility   or 
value.    We  nauy  call  it  "pi a»e- value."    Liice- 
wigfe  the  mercharat  keeps  tbin/zrs  from  a  time 
when  not  want«d  to  a  tioae  when  wanted, and 
increases    their    utility.     Thus   ha   createi 
"tirae-valup."      And    it   should   be  remem- 
berf'd    in    this    c»«Hecti«n    that  ocmmeroe, 
with  the  aid  of  the  improved  means  of  com- 
raunicatinn  and  transportatlan,  has  become 
80   effective  in  the  creaiiou  of  time-values 
and  place-values  that  famines   are  now  un« 
known  in  the  civilized  world,  whereas,  even 
as  late  as  th^  las'  cwntury,  dlstriots  in  France 
and  Eng-land  "iitfered  the  horrors  of  famine, 
while  supei'fluity  could  be  found  within  three 
hundrt'd  uailes. 

It   has   beea   stated   that  oooameroe   pre- 
viouflv  ministered  t«  luxury.    Onlv  articles 
of  hif?h  value  in  small  bulk  could,  in  early 
days,  tiecomf  the  object  of  commerce,  for  it 
cost  more  to  transport  Siich  commodities  as 
the  unassiPS  consumed  than  they  were  worth. 
Proclous  stone?,  aruber,  finely- woven  fabrics, 
silk»,     spices,     wine,     oil— these     are     the 
articles   with    which    early    commerce   was 
concerned.     Perhaps     HOthinjr     can    better 
illustrate     the     progress    of  commerce   ia 
our     centurv     than      those      pa^^saares     la 
Adam  Smith's  "Wealth  of  Nations."  in  which, 
in  1778,  he  assures  tl^e  EHsrlish  farmers  that 
they  n«ed  never  fear  the  iasportation  of  Irish 
eatti©  nnd  Irish  srrain,  because    tJiey  were  so 
bulky  in  proportion  to  values  as  to  render  so 
distant  a  trarisportation  unprofitable.    *'Evea ' 
the  l9r«'^din£r  counties  of  Great  Rrltain  are 
never  likely  to  bo  much  affected  by  the  free 
importatioa    of  Irish    eattlo."    And  a   little 
furrhoron  Smith  adds:    "Even  the  free  Im- 
portation of  forelurn  corn   oould   very  little 
aff«ct  the  interests  of  the  farmers  of  Qreat 
Britain.    Corn   is  a  much  aiore  bulky  com- 
modity t"ha«  hurcher's  meat.    ♦     ♦    •     The 
small  quantity  of  foreiern  corn  Imported  even 
in  tinjes  af  th«  eroarest  scaroiry  may  satisfy 
our  farmers  that  they    can    hnva    uothinifio 
fear  from  the  freest  importation."    AJ  every 
one  knows,  a  hundred  year!*  later  the  impor- 
tation of  corn  asd  beef  from  America,  three 
thouaand  miles   away,  has  been   a  cause  of 
alarm  to  the  British  farmer. 

Two  conclusions  follow  aaturallv  from 
this:  One  in  that  distance  is  Rot  In  itself  the 
barrier  acainst  competition  which  It  once  was, 
jiconaequently  does  not  afford  the  same  de- 
jrrpe  of  proteotion  to  a  eiven  locality;  the 
other  is  that  restrictions  upen  commerce 
rio'v  are  a  laattor  of  concern  not  merely  or 


ch.ofly  to  the  woaithy,  aaoStS"  was  tho  ca3«. 
put  may  be  felt  disastrously  by  the  poorest 
in  raiainif  the  prices  of  artlcl«>8  of  dniiv  con- 
si^mption  for  the  masses.  The  question  of 
freo  trade  and  protwction  thus  assutBes  a 
mae-ritude  h.>retof  .re  unknown.  The  total 
forei4rn  commerce  of  E'i«:land  was  estimated 
in  1350  a^t  2  shillint^s  10  p? nee  per  capita,  ia 
1614  at  16  shii  infrs  6  pence  per  capita.  In  1801 

^^  !  ^''"lol^^^'^iL''"'^'  «"'^  6  pence  per  capita, 
but  iu  1880  at  16  pounds  and  6  shillings  pir 

^_'')^fiV^rc&mUyiLln(ior  the  exports^of  the 

Si'S  .?.^%^eQi'°  m^*^''i?  ^''Of^  53  0;J  in  1801  to 
fii  9d  m  ism.  ihe  foreign  commerce  of 
Germany   more  than  doubled  from  1860  to 

loo  J. 

Comme-ce  has  ffone  hand  in  hand  with  tba 
increaainp  national  and  international  divis^'oo 
of  labor  which  has  mad©  modern  wealtti  and 
tne  wide  diffusion  of  comfort  possible     la 
early  stas-^s  of  industrial  development,  each 
family  was  sufflcisnt  unto  itself  and  enjoyed 
R  rude  kind  of  indopeadenoe,  but  existence 
was     precarious.      Daarth     fMllswed    plenty 
quickly,  and  tnere  could   be  no  itd^quate  pro- 
vision   for    future    coatimroHClea.      But    as 
eiviiization  began  to  advance  the  div.sloa  of 
labor  WHS  carried  further  and  further,  until 
at     present     time     each     one     has     some 
one     occupatioB,     perhaps     manufacturlnir 
the     sixtieth     part     of      a     shoe.       Thou- 
sands    minis^ter    unto    bis    wants,    and    he 
[in  turn  ralnisfors  unto  thousands.    To  use  a 
I  scientific  expression:  Diflferentiation  accom- 
panies social  development.    But  the  point  of 
I  Iniporranceforus  nowis  this:   Thisdive-rslty 
of  pursuits,  upr.n  which  our  Industrial  oivis* 
zation  rests,  implies  and  requires  tne  exist- 
ence of  active  commerce.    The  principle  Is 
for  #'«ch  individual  to  do  what  he  can  do  best, 
and  for  tne  peopia  of  «ach  resrlor.  to  utilize 
their  own  reUtively  greatest  advantages.    If 
Minnesota  can    beitarow  wheat, and   South 
Carolina  cotton,  and  Virginia  corn.lt  is  mani- 
ffcst  that  the  total  wealth  of  society,  the  prod- 
ucts   for   our   consuiuDtioB,  will    be    more 
abundant  if  each  locality  Is  devoted  to  that 
pursuit  f  r  which  it  U  specially  adapted. 

Precisely  the  same  principle  holds  wirh  re- 
gard to  International  commerce.    If  England 
is  specially  adapted  for  certain  pursuits  and 
we   for   oihetH,    it   must  be   clear  that  our 
mutual  prosperity  will  be  promoted  by  a  di- 
versity or  pursuits  and  an  cichaotre  of  prod- 
ucts.    Or  are    there   special  conditions  ap- 
P  icabletu  a  divisi  h  of  labor  batwem  nations 
which  hre  not  applicable  as  b.^tween  the  var- 
ious parts  of   the  s  me  country?    Some  will 
say:  if  England  sends   us  commodities,  our 
labor  and  capital  will  be  deprived  of  oppor- 
tunities for   employmatit?    But  bow  su?    If 
England  sends  us  commodities,  laust  we  no! 
Sena  comniodiiies  abroad  in  payment?    And 
wilt    ntJt   our    labor  and  capital  have  morr 
abundant  employment  in  the  production  oj 
cammodiries   for   which    they   are  spcclalli 
adapted   ihaa  in   tbeso  for  which  they  ar« 
not  spaclally  adapted? 

Thureura  tboso,  however,  who  think  that 
It  la  a  srot  d  thing  for  a  nation  to  send  abroad 
more  than  It  imports,  so  that  i(  may  have  a 
favorable  balance  of  trade.  Ic  is  imagined 
that  a  nation  grows  wealthy  by  this  means. 
It  IS  therefore  necessary  to  examine  th6  bal-. 
ance  of  trade  theory. 


PROBLEMS Qf TODAY, 

'^ — 

15ALANCE    OP    TUADE     liiLUKV. 


POPULAR  NOTIOxNS  REDUCED  TO  SE:;. 


The   vr  ijority  of  the  Wealthier    Nations 
Il.i^e  the  Balance  Acainst  Them. 

[Written  for  the  Caltimore  Sun.l 

ARTICLE  V. 

"ilo  who  attempts  to  draw  any  conclusion 
w)j;iitver  as  to  a  natloii's  woalih  or  poverty 
froiu  the  more  fact  of  a  fa',  oiablo  or  un- 
•;iV(>rablo  balance  of  ti'ailo,  has  not  «rr  apod 
The  first  fundamental  principla  of  political 
ccon-jmv." 

When  I  heard  thei»e  words  uttered  wi:h 
emohasishy  one  of  the  most  careful  livir  jr 
s'ati^tioians,  some  yesrs  ago,  I  must  oo;  f*  s- 
that  I  was  a  little  startled,  aecustf)raed  as  i 
hAil  bren  to  laudafions  of  favor  ibl':?  bal  mces 
of  trarle  as  indications  of  increasinar  werilth- 
Yet  1  suppose  nothing  in  the  entire  ranpre  of 
econf.inic  sciences  is  more  beyond  contro- 
versr. 

Everybody  knows  what  la  m?ant  by  a 
favorable  b  lance  of  tra^e.  A  trade  betweon 
two  cnunt?i"S  is  considered  favorable  for 
that  one  which  exports  a  lareer  quantity  of 
sroodg  than  it  imports,  and  unfavorable  for 
the  one  which  imports  more  than  It  expnrrs. 
Minilarly  tbe  entire  forelsrn  trade  of  a  country 
l3  revrardod  as  favorable  if  all  exports  exceed 
in  vulue  Jill  imports.  Theiden  is  that  there 
is  In  such  cases  a  balance  which  most  be  paid 
io  money,  and  that  a  nation,  like  an  in- 
dividual, crows  opulent  by  the  accumulation 
of  money.  Let  us  examine  these  various 
ideas  with  some  care. 

If  our  exports  exceed  in  value  our  im- 
ports, what  does  it  mean?  It  may  siernify 
that  a  number  of  Europsans  own  property 
in  the  QniteJ  States  and  that  this  surplus 
pays  their  interest,  dividends  and  profits. 
We  know,  as  a  maiter  of  fact,  that  many 
Europeans  do  oavu  much  property  in  tho 
United  States.  Englishmen  own  va?t  tracts 
of  land  in  our  country,  many  millions  of 
acres,  particularly  in  our  West,  and  the 
absentee  English  landlord  is  become  a  promi- 
rent  feature  of  American  as  well  as  of  Irish 
life.  Likewise  irreat  blocks  of  stocks  and 
bonds  issued  by  American  corporations,  as 
well  as  municipal,  State  and  Federal  bonds, 
ere  held  in  Europe.  Now  is  it  not  evident 
that  after  we  have  sent  abroad  enough  koous 
to  pay  for  gools  sent  us,  wo  must  still  send 
abroad  an  annual  tril)ute  in  exports  to  satisfy 
the  claims  of  foreigners  upon  our  industryy 
This  accounts  for  a  portion  of  our  so-called 
favorable  balance  of  trade,  but  who  will  say 
that  it  is  a  cause  for  national  self-gratula- 
tion. 

iiuta  favorable  balance  of  trade  in  the 
United  States  may  also  siarnify  something 
else.  It  may  me  in  that  we  are  paying  oflf  the 
capital  of  the  debts  wo  owe  abroad.  If  the 
surplus  is  not  Invge  enough  evon  topay  inte- 
■  lest  on  European  claims,  we  may  bec'ano 
more  deetdy  involved  in  debt,  the  favor  tMo 
fjalance  of  trade  to  the  contrary  nothwith- 
>iaudii)>r.  Lot  us  recall  our  itistruoiive  ex- 
perience durinc  the  late  civil  war.  We  were  at 
that  time  makln/  heavy  demands  on  Euro- 
pean industry  on  account  of  extraordinary  ex- 
penditures at  homo.  Our  Imports  exceeded  in 
Taluo  our  exporis.  We  wore,  as  a  matter  of 
faet,£rolnc  in  debtfor  current  expenses.  Aftor 


the  ;fln^ 

'OipUi     yii     ijui       iwiciKU      JiiUUULUUUUd-^,     SiUd    OUT     ■ 

exports  exceeded  in  valuo  our  imports.     - 
that  time  our  favorable  balance  of  trad< 
6'>  far  as  it  eoi lid  be  accounted  for  by  the  pay- 
ment of  del)r,  was  undoubtedly  u  good  thing.   ! 

A  favorable  balanco  of  trade  mi^ht  be  par- 
tialiyexplainod  by  the  acquisition  of  prop- 
fivty  abroad  by  Americans.  1  do  not  say  th>it 
such  is  a  fac.  1  simply  sav  it  is  a  possible  ex- 
planation. If  Americans  are  acquiring  prop- 
erty abroad,  it  is  manifestly  necessary  not 
only  to  send  out  of  the  country  goods  in  suffi- 
cient quantity  to  pay  for  troods  we  import, 
but  a  surplus  to  pay  for  investments  which, 
on  this  hypothesis,  are  being  made  in  foreitrn 
countries. 

If  the  balance  of  trade  is  favorable,  the  dif- 
ference, (;r  a  part  of  it,  is  sometimes  imported 
in  bullion  or  money. 

A  favorable  balance  of  trade  may,  then, 
denote  increasinir  wealth,  or  it  may  denote 
poverty  and  economic  dependence  upon  for- 
eifc'fi  n  itions.  It  may  denote  neither  the  one 
Tior  the  other,  but  simply  sisrniry  that  a 
nation  is  noldina- itsown  in  international  rela- 
tioM>-.  Tne  mere  fact  of  a  favorable  balance 
«f  trade  in  itself  tells  you  absolutely  netting 
about  a  country.  It  is,  however,  true  that  a 
malority  of  tbe  wealthier  nations  of  the 
earth  have  what  we  call  an  unfavorable  bal- 
ance of  trade. 

Letus  compare  the  value  of  imports  with 
that  of  exports  in  a  few  countries,  selectinj? 
recent  years  almost  at  hap-hazard,  and  not 
taking  yeari  with  a  design  of  proviuif  some- 
thing. 

The  value  of  German  imports  for  1876  was 
J5,914.8  millions  of  marks,*  that  of  exports 
2,551.2  milli(;n3  of  marks;  for  1887  the  flirutes 
are:  Imports,  3,887.0  millions;  exports,  2,775.3 
mlllii;ns.  Precious  metals  are  included,  but 
If  they  were  excluded  the  proportions  be- 
tween exports  and  imports  would  not  be 
radicully  chaiiReJ  thereby. 

The  imports  into  France  in  1873  were  valued 
at  4,576.4  millions  francs,t  the  oxp  ^rtsat  4,823.3 
millions  of  francs.  The  figures  for  1874  are: 
Imports,  4,422.5  miliions:;  exports,  4,702.1  mil- 
lions; for  1875.  imports,  4,41.8  millions;  ex- 
ports, 4,807.0  millions;  for  1876.  imports,  4,9J8.8 
millions;  exports,  4,547.5.  Precjous  metals 
ore  included  in  exports  and  imports,  but  as 
in  the  case  of  Gerujany.they  are  relatively  so 
au^all,  and  are  in  this  case  so  nealy  equal,  that 
I  the  proporuons  between  exports  and  imports 
are  uot  changed, 

Tho  exports  from  France  exceed  in  value 
the  imports  from  1873  to  1875,  inclusive,  but  in 
1876  the  imports  exceed  in  value  exports.  A 
possible  explanation  would  be  that  France 
was  sendintr  commodities  out  of  the  countrv 
from  1873  to  1875  to  pay  for  the  expenses  of 
the  war  with  Germany,  but  that  in  1876  trade 
had  regained  its  normal  condition. 

Hume  tells  us  that  over  a  hundred  years  the 
English  nation  was  struck  "with    universal 
panic"  because  some  one  demonstrated  that 
the  balance  of  trade  was  so  unfavorable  as  to 
leave   them— that   is,  the    Enjrlish    people- 
without  a  shiliina-  in  money    in  five  or  six 
years.  That  ttemousiration  was  made  20  years 
before  Hume  wrote   his   essay  on  "The  D<1- 
ance  of  Trade,"  but  he  records  the  fact  that 
money  was  then  more  plentiful  in  England 
than  evL-r  before.    The  uafavonblo   balance 
of   tmde   still  continues  in  Enjriand,  and  is 
«omethinor  enormous— the  besi  proof  of  Eng-    , 
4Silid*8Jinmenso  weal;h,  for  this  unfavorable  | ' 


I 


'\\ 


\ 


? 


iD..lance  repitauuLs 
pay  to  EiiBlisbm*»n. 


"nrr 


Jaad  io  1874— to  take  the  statistics  la  one  year 
only",  which  auswers  our  purposes  aa  well  as 
a  do^en,  exclusive  of  precious  metals— were 
valued  at  £331443,000:  the  exports,  also  ex-  i 
elusive  of  pivcious  met:tl,«,  at  £278,053,000.        1 

Kich  little  Belifium  also  has  a  large  uafa- 
•Vorable  balance  of  trade.  The  imp  rt-j  into 
JBeleriura,  exclusive  of  precious  metals,  were 
valued  atl,448.5  millions  oir  francs;  the  exports 
from  the  uoumrv,  also  exclusive  of  precious 
metals,  at  1,063  8  njiliions. 

Theseare  wealthy  countries,  but  the  United 
States,  with  its  favorable  balance  of  trade.  Is 
also  prosperous.  In  the  fiscal  year  1877-8  our 
imports  were  vali.-ed  at  ?466.873,000,  and  our 
exports  at  8733,812,0)0.  But  E;? >  pi-poor,  im- 
poverished E;^ypt-has  the  most  maffuiflceut 
B*vcalltd  ftirorablj  balance  of  trrtd^  lo  be 
found  in  the  worldl  I  mean,  of  course,  in 
proportion  to  its  entire  commerce.  In  1874 
the  imports  were  valued  at  5iJ7.06i,153  pias- 
ters, the  exports  at  1,343,347,266  piasters;  the 
•estimate  for  1876  was,  imports,  561,946,693  pias- 
ters, exports  1.3;J3,3.'J3. 408  piasters. 

These  illustrations,  which  mig-bt  be  multi- 
plied indetiniteiy,  show  how  much  sijfnifl- 
•cance  is  to  be  attached  to  a  favorable  balance 
<of  trade  in  itself.  However,  it  is  only  a 
wealthy  nation  which  can  huve  a  larg-e  un- 
ffavorable  balance  of  trade  as  a  permanent 
thinpr.  What  does  this  mean?  It  means  that 
.«uch  a  nation  possesses  stocks,  bonds  and 
various  kinds  of  property  in  other  countries, 
and  that  the  people  of  those  countries  are 
-workiujf  forit.  Itissirailar  to  the  case  of  a 
Tinan  who  is  able  to  consume  more  than  he 
a»im!.elf  prod uees.  It  is  a  sign  that  others  are 
working  for  biui.  To  value  a  foreisn  com- 
merce in  proportion  to  exports  is  to  miscon- 
icelve  the  advantajfes  of  commerce.  Com- 
merce is  valuable  for  what  it  brinjfs  us,  uot 
:for  what  it  tiikes  from  us. 

It  will  readily  be  un.ierstood,  then,  that  lam 
not  at>le  without  reservation  to  join  in  the 
gelf-K-rdtulations  of  those  who  delijfht  in  our 
largre  balance  of  trade,  and  that  I  scarcely 
ihiuk  this  a  stroug  tariff  artrument.  Our 
tavorablb  balance  of  traiie  places  us  in  the 
Baiue  caiepTory  as  Ireland,  India  and  E^ypt. 

*A  mark  is  $0,233;  for  purposes  of  r^^uirh 
^calculation,  four  maikii  luiiy  be  refraraca  as 
-equal  in  value  n>  oi.e  dollar. 

tA  fratic  is  a  little  more  than  $0.18;  for 
Tou^h  eomputatiou?,  five  :ranc3  maybe  re- 
(KardeJ  as  Lquai  to  one  dollar. 

Balance-of-Trade  Theory-Furtlier  Views 
on  the  Irade  Problem  by  Prof,  liiclmrd 
T.  Ely,  of  JohnH  Uopkins  Uuiversity. 

LWriiten  for  the  Baltimore  Sun.I 

ARTICLE  VI. 

There  are  several  points  connected  with  the 
balance-of-trade  theory,  as  usually  t^tated, 
about  which  it  is  esseutini  ti:ac  we  should 
have  clear  ideas.  They  therefore  require 
turther  examination. 

jTirst,  it  follows  naturally,  from  what  has 
been  said  in  the  previous  article,  that  a  favor- 
iBible  balance  of  trade  does  not  siK-nify  that 
,*he  precious  metals  are  flowinjf  into  the 
oountry.  In  i'self  it  tells  us  nothing- about 
the/nternational  movements  or  the  preclms 
laeta/s.  Gold  and  silver  may  be  coming  to 
ihecou^ntry  while  an  unfavorable  balance  of 
trade  exists. 

';        ,>in  lc83  the  amount  of  arold  and  silver 
.ii^tiOited  into  Et  r'^'"''  exceeded  in  value  the  i 
s)reci^^;  "^i<^mg_.  ed,  althougrh  durinsr 

"^  ""  vj^aifaipst 


wT-' 


EriarifjDd  to  an  am   ..... .,>,..,.■   ...  ,...,.. 

otiehundrej  and  twenty  millions  of  pounds 
sterlinj?-. 

^  On  the  other  hand,  the  precious  metals 
,may  bel^ain?  a  country  whiie  a  favorable 
balance  of  trade  continues.  The  commerce 
of  the  United  States  for  1884  serves  as  an 
example.  The  balance  of  trale  wa"*  in  our 
favor,  but  the  value  of  precious  metals 
exported  exceeded  the  value  of  precious 
metals  imported. 

Seeood.  If  a  favorable  balance  of  trade  in- 
the  CJnited  States  were  always  accompanied 
by  an  addition   to   our   store   of   money,  it 
would  not  necessarily  be  a  catise  for  national 
self-^ratulation.       People    frill     into     the 
most  obvious  errors  in  this  matter  because 
they  do  not  stop  to  inquire  into  the  differences 
between    those   thiols  which  mike  an  indi- 
vidual prosperous  and  those  which  make  a 
nation  prosperou-s.    A  merchant  gays:   "If  I 
increase    my   stock    of     money   I    become 
wealthier."    This  is  true,  but  it  doe?  not  fol- 
low necessarily  that  we  would  all  ba  mora 
pro3p3rou3jf  the  total  amount  of  mone>  In 
existence    were   doubled    It  would,  on  the 
other  hand,  be  a  misfortune  to  some  people, 
and  to  multiply  the  araouot  of  money  in  ex- 
istence twetry  times  would  proD^hly  be  a 
univrsal  cal^tmlty,  up-etiinff  ail  exi«tin^  in- 
dustrial and  commercial  relations.  Thismust 
be  made  ekar.    If  the  money  in  my  pocket  is 
iiicreased  twentyfold  it  is  a  jfood  thinsr  for 
me,  because  my  proportion  of  the  money  in 
the  country  is  increfisiod.    I  cin  buy  more 
RTOOds.    But  if  the  amouMt  of  money  in  eve 
one's  possession  is  multiplied  by  twenty,  wi 
there  not  be  a  corrHsnondina-  rise  in  price- 
If  so,  will  I  be  bLMter  off  than  I  was  beforer^ 
in  one  cas^-,  I  will,  namely,  if  I  owe  sonae 
thing  to  some  one;  if  I  am  in  debt  and  my 
d(,*bt  Is  to  be  paid  in  monev.    If,  on  the  other 
hand,  sums  of  money  an«  due  me,  thisiticrease 
in  the  circulating  medium  impoverishes  me. 
We  may  look  at  thi^  matter— and  it  is  of  vital 
Importance  in  those   dlscus-iions— from   an- 
other standpoint.    Why  do  we  want  money? 
MaiiifePtly  for  the  thinjfs  it  will  buy.    But 
does  the  increase  in  the  supply  of  money  in 
Itsf-lf  increase  the  quantities  of  useful  things 
which  we  wish  to  b  y? 

The  Spaniards  In  the  sixteenth  and  seven- 
teenth centuries  made  the  mistake  of 
overestimating  the  importance  of  gold  and 
silver  to  a  country,  and  instead  of  building 
up  commerce  and  manufactures  and  imorov- 
ing  their  agriculture,  seemed  to  think  of 
little  else  than  the  devices  by  which  the 
largest  possible  amount  of  the  precious 
metals  could  be  brought  into  the  country, 
especially  from  their  American  possessions, 
and  once  In  the  country  could  be  kept  there. 
They  n'^glecled  the  most  itnportant  sources 
of  wealth,  and  to  this  day  they  have  not  re- 
covered from  the  disastrous  consequences  of 
their  mistaken  policy. 

I  am  far  from  saying  that  It  makes  no  dif- 
ference whether  we  have  much  or  little 
money.  A  large  amount  is  require!  to  con- 
duct the  business  of  the  country  and  to  ob- 
viate the  inconveniences  of  barter.  An  in- 
:  creasing  amount  is  required  for  our  growing, 
expanding  industrial  life.  A  fall  in  prices, 
owing  to  insufficient  supply  of  the  precious 
•  metals,  increases  the  value  of  financial  obli- 
gations incurred  in  the  past  and  enriches 
bondholders  and  other  creditors  at  the 
expansjB  of  the  rest  of  the  community. 
I  All     th'«     I     recognize.     I     simply    main- 


taia  1     of      ooininerco 

by  prwtejtive  tarilli  is  required  at  the 
pre!?eat  time  on  account  of  our  money 
supply.  There  are  other  wnys  and  better 
ways  of  provlditifT  for  a  sufficient  quantity  oif 
money.  The  international  movetneut  of  the 
precious  me-als  is  lanscly  automatic.  If  the 
precious  metals  bt^trln  to  leave  a  oountry 
which  is  not  cursed  with  an  Irredeemable 
paper  currency  prices  will  fall,  but  the 
moment  prices  fall  it  becomes  more  proflt- 
able  for  foreiirnera  to  purchase  our  oora- 
modliies,  and  tnore  is  thus  a  tendency  to 
check  the  flow  of  money  from  the  countrr. 
This  by  no  m^ans  exhau.-?fs  this  larsro  subject, 
but  it  is  sulficiont  for  present  purposes. 

Tblrl.  1  have  to  remark  that  as  between 
countries  commodities  are  exchanged  for 
commodities,  and  that  very  little  money 
passes  from  the  one  to  the  other.  If  Eng- 
land sends  us  commodities  we  do  not,  as  a 
rule,  send  money  abroad,  but  we  pay  for 
them  In  commodities.  This  is  a  matter  so 
familiar  to  merchants  who  have  dealings 
with  ftjreifirn  couuries  that  it  may  seem  to 
them  scarcely  worth  while  to  mention  it. 
Yet  a  failure  to  comprehend  this  fact  and  its 
bearinirs  is  a  chief  cause  of  confusion  of 
thouifbt  in  resrard  to  international  trade. 

This  third  point  is  closely  connected  with 
the  second.  When  money  does  beirin  to 
leave  a  country  It  becomes  more  profitable  to 
export  commodities  than  formerly.  Thus 
throug-h  action  on  prices  the  natural  rela- 
tions between  exports  and  imports  are  main- 
tained. I  send  ifoods  to  Euifiand  ani  the 
Eniflishmari  to  whom  they  are  sent  becomes 
indebted  to  me.  At  the  same  time  another 
Enjflishraan  senJs  goods  of  the  same  value  to 
an  American  Imuortor.  So  we  agree  that 
this  Importer  in  America  shall  pay  me,  and 
that  the  Eni^llsh  exporter  shall  receive  his 
pay  from  the  Englishman  who  bought  my 
goods.  Thus  no  money  leaves  Eoeland  and 
none  leaves  America.  This  all  takes  place 
through  the  medium  of  bills  of  exchange, 
drafts,  occasionally  postal  money-orders,  and 
the  like,  and  the  services  of  bankers  and 
broKers  are  required,  but  the  principle  is  the 
simple  one  just  described. 

Illustrations  will  serve  to  render  this  still 
clearer.  In  the  year  1884  in  Eneland  it  re- 
quired an  importation  and  exportation  of  only 
a  little  over  foriy  millions  of  pounds  sterling 
to  do  a  foreign  business  of  over  six  hundred 
end  twenty  millions.  It  required  in  the  same 
year  in  the  United  States  an  exportation  and 
Importation  of  less  than  eighty-eiurht  mil- 
lions of  dollars  to  do  a  total  foreign  business 
in  imports  and  exports  valued  at  about  four- 
teen hundred  millions  of  dollars. 

Fourth.  The  balance-of-trade  theory  grew 
up  at  a  time  when  it  was  imagined  that  there 
was  a  raoi'e  serious  diversity  between  the 
Interests  of  one  nation  Hud  those  of  another 
than  actually  exists.  It  used  to  be  supposed 
that  what  one  nation  irained  another  lost, 
and  our  proteciive  tariffs  can  be  traced  back 
to  that  illusion.  This  must  not  be  misunder- 
stood. This  illusion  i»  not  a  sufficient  ex- 
planation of  protectionism  now.  It  is  not  iu 
this  connection  even  slated  that  somethincr 
may  not  be  said  for  protectionism.  It  is 
simply  aS3erted  as  a  historical  fact  that 
protective  tariffs  can  be  traced  back  to  this 
illusion. 

Somo^optiipists  push  the  idea  of  hnrmonv 


1 


i^bf  int-  far.    Uurortu- 

'  nately,  ^^.^......v,    ........ .^  ..  jes   not  exist— 

unless,  indeed,  we  view  these  interests  from 
thehighis    Christian  stand noir.t.    Butin  the 
main,  iu  matters  of  trade,  international  intor- 
csu  are  harmonious,  at  least  to  this  degr(3e, 
thai  each  ought  to  desire  the  prosperity  of  all 
the  others.    This  Is  so  sniplo    that  it  seems 
absurd  to  state  it  as  a  scientific  prop  isition; 
yet  the  fai^  re  to  act  on  this  principle  has 
been  a  fruitful   cause  of   enmity   between 
nations.    Do  we  desire  opulent  or  impover- 
ished customers?    Which    class  does  a  mer- 
chant desire?    Ttie  case  of  a  merchant's  cus- 
tomerA  is  similar  to  that  of  the  purchasers  of 
a  country's  products.  Nevertheless  some  peo- 
pletalk  as  if  we  had  something  to  hope  from 
the  impoverishmeut  of  Europe  by  means  of 
war  or  otherwisel 

What  we  would  hereby  train  would  be  tem- 
porary and  be  more  than  counterbalanced  by 
loss  in  the  future.    All  this  has  been  stated 
often  enough,  but  one  hundred  years  ago  it 
was  as  something  startling  that  Hume  pro- 
claimed his  desire  for  the  prosparity  of  other 
jiaLions  as   consistent    with    his    loyalty    to 
England.    These  were  his  words:  "Were  our 
narrow  and  raaiiunmot  politics  to  meet  with 
success,  we  should   reduce    all   our    neii^h- 
boring   nations  to  the  same  state    of   b1  )th 
and  ikrnorance  that  prevails  in  Morocco  and 
the  coast  of  Barbary.    But  what    would  be 
the  consequence?     They  could  send  us  no 
cotnmoditJes;  they  could  take  none  from  us; 
our   domestic  commerce    itself    would   lan- 
guish for  want  of   emulation,  example  and 
instruction,  and  we  ourselves  should   soon 
fall  iuio  the  same  abject  condition  to  which 
we  had  reduced  them.    I  shall  therefore  ven- 
ture to  acknowle 'ge  that  not  only  as  a  man, 
but  as  a  British  subject,  I  pray  for  the  flour- 
ishing   commerce   of   Germany,  Spain,  and 
even  France  itself.     1  am  at  lea-t  certain 
that   Great   Britain    and   *<11   those   nations 
would  flourlsn  more  did  their  sovereigns  and 
rainistersalopt  such  enlarged  and  beaevoieot 
sentiments  toward  each  other." 

The  imlance-of-trade  tl,ieory,  then,  as  ordi- 
narily'presented  must  be  rejected.  It  repre- 
sents it  as  the  purpose  of  each  nation  to  ex- 
port more  than  it  imports  in  values,  mani- 
festly impossible  as  a  universal  policy,  to  say 
Qotbiug  uf  the  fact  that  it  misrepresents  tiie 
true  end  of  coiuimorce,  whlcn  is  import-,  not 
,exp  >ns.  The  bypotnesis  up^n  which  it  is 
b  sed  is  false,   and   the  couciusiotis   draun 

from  it  are  misle'din?. 

^  *  ♦  ^  »> 

Thb  Consumehs  Pay  It.— Hie  Medlicott 
Comp.xny,  of  Windsor  LocivS,  Conn.,  manu- 
facture tlno  wo  den  knit  goods.  According 
to  the  Springfii^dd  llepuOlican,  tnis  company 
imports  70.U00  pounas  ''f  Australian  v\ool 
o.'Ch  year,  and  on  this  t'tey  pju-  u  duty  or  10 
cents  a  pouiid,  $7,000  a  year.  ilr.  Charles  E. 
Cliaffee,  piinoipai  stcckhol  ler  and  prt  si.ient 
of  the  0  >mpauv,  and  a  staunch  republican 
and  strict  protect!  »nist,  ^ays  he  buys  this 
Australian  wool  because  that  particular 
quality  cannot  be  nbtiiineJ  here  at  any  price. 
Wno  pai>:  the  ^,000?  The  co:;sumer.-*,  and 
nobody  tlse.  Ttus  is  only  one  case  where  t'le 
public  nood  detiia  'd-i  u  rovi.'^ioii  and  roduc-' 
tion  of  the  ari&.—Boxfon  T  auscripf,  rep. 


tt     -    il'Uiii 


f 


PROBLEMS  OF  TODAY. 

TB^  TARIi>F  AKD  ITS  HISTORY. 


A  Bad  SYSTEM'S  INSIDIOUS  ADVANCE. 

Li- I  I  I  i« 

A  Sketch  of  tb«  Federal  Taxf  ng  Systems 
by  Prof.  Kicbard  T.  Ely,  of  Johns  Hop- 
kin*  University. 

L Written  for  the  Baltimore  Sun.] 

ABTICLB  VII. 

I  infer  from  occasional  remarks  that  some 
people  who  have  been  good  enoueh  ro  read 
ray  articles  Imafirlne  that  I  take  a  mora  radi- 
cal position  on  the  subject  of  free  trade  than 
that  represented  cither  by  The  Sun  or  Mr. 
Gloveland's  messag-e  to  Consrreas.  This  is 
not  the  case.  I  have  no  desire  to  attach 
American  manufacturers,  and  I  certainly  am 
not  prepared  at  present  to  advocate  the  with- 
drawal of  all  protective  duties  at  once.  On 
the  comrary,  I  hold  that  this  would  be  a 
g-rievous  blunder  and  a  positive  wroatr. 

The  subject  of  tariff  legislation  must  be 
viewed  historically  in  order  to  understand 
the  merits  of  the  present  controversy 
between  free-traders  and  protectionists  in 
the  United  States.  The  men  are  few,  indeed, 
who  would  claim  that  it  Is  rational  to  legis- 
lat3  on  the  tanlT  as  if  we  were  sroinif  to  start 
from  the  beginning-  and  frame  a  new  policy 
for  a  new  land.  Our  present  policy  is  an 
historical  growth,  and  as  such  must  be 
trea.cd.  When  one  sees  the  jobbery  and  cor- 
ruption connected  with  tariff  legislation,  the 
hypocrisy  it  fosters,  and  perceives  how  cer- 
tain monopolies  hide  themselves  behind  it  as 
a  safe  bulwark,  one  feels  at  times  moved  by 
righteous  indignation  to  wish  the  whole  thimr 
swept  from  the  face  of  the  earth.  But  more 
mature  reflection  tends  to  calm  one.  and  show 
the  impiacticability  of  any  such  radical 
measure. 

It  is  impossible  to  present  a  history|of  the 
tariff  legislation  of  the  United  States  in  those 
tirticles,  for  if  it  were  attempted,  to  do  that, 
and  to  do  it  thoroughij',  now  issues  might 
arise  in  the  country,  and,  indeed,  in  turn 
become  matters  of  tae  past  before  this  series 
of  papers  could  be  brought  to  a  close.  A  few 
main  faeis  should,  however,  be  brought  to 
mind,  and  a  firm  grasp  kept  on  them  in  dis- 
cussions on  the  tariff. 

PTvjtectioniem,  whatever  proportions  it  may 
have  since  assumed  or  whatever  appearance 
it  may  now  present,  entered  our  country 
with  the  meekness  of  a  lamb.  Everybody 
knows  how  it  happened.  It  became  neces- 
sary in  1789  to  provide  the  young  republic 
with  revenues.  Direct  taxation  "seems  to 
have  been  rejected  without  serious  consider- 
ation as  not  adapted  to  our  federal  irovern- 
ment.  There  was  the  usual  prejudice  against 
direct  taxation,  coupled  with  a  jealousy  of 
the  States  against  what  they  would  have 
dfemed  interference  in  the  affairs  of  their 
citizens.  Now,  as  indirect  taxes  were  the 
only  alternative,  it  remaned  to  choose  be- 
tween taxes  on  commodities  produced  at 
home.  Internal  revenue  taxes,  and  taxes  on 
imported  articles,  customs  duties. 

Itte  prejudice  against  internnl  taxes  seems 
to  have  been  nearly  as  strong  as  against 
diredt  taxes,  and  for  somewhat  the  same 
reason.  Taxation  of  commodities  is  in  any 
shape  a  serious  interference  in  the  business 
affairs  of  producers,  but  when  commodities. 


are  tax^a  ou  entering  the  country  in  a  few 
;  great  ports  it  is  Jess  obvious.  Today  there 
are,  doubtless,  persons  who  fail  to  see  the 
lact,  and  it  is  beyond  all  controversy  that  the 
taxation  of  three  or  four  articles  of  domestic 
.<  r^  wth  or  manufacture  Is  an  almost  incom- 
parably smaller  measure  of  interference  In 
private  affairs  than  the  taxation  of  four 
thousand  and  more  imported  articles.  On 
the  other  hand,  the  tax  paid  by  producers  at 
home  is  more  readily  visible;  the  fact  of  the 
existence  of  the  tax  is  palpable.  It  was  there- 
fore decided  to  begin  our  revenue  system 
with  customs  duties. 

The  first  tariff  act;  was  passed  in  1789.  It  was 
mainly  for  revenue,  while  protection  was 
only  incidental.  Another  motive  which  was 
prominent,  if  not  predominant,  is  well  de- 
scribed by  Prof.  Henry  U.  Adams  in  his  mon- 
ograph on  "Taxation  in  the  United  States, 
1789-1816."  It  was  the  spirit  of  nationality 
whicb  was  so  pronounced  In  the  early  fed- 
eralists^ 

It  was  hoped  by  means  of  a  tariff  on  Im- 
ported commodities  and  by  the  use  of  domes- 
tic products  to  weld  together  the  different 
States  into  a  strong  Union.  It  was  this 
Fame  animus  which  prompted  public  men  to 
appear  in  homespun  clotbing.  The  differ- 
ence between  this  plea  for  protection  then 
and  the  plea  we  hear  now  is  brought  out  by 
Prof.  Adams  in  these  words:  "The  argument 
then  regarded  as  convincing  was,  'The  sure 
•way  to  establish  nationality  is  to  exclude  for- 
eign products.*  Now,  on  the  other  hand,  we 
hear,  'The  sure  way  to  become  rich  is  to  ex- 
clude foreign  products.' " 

But  what  was  the  rate  of  taxation  iraoosed 
by  the  act  of  1789,  and  what  was  the  charac- 
ter of  this  taxation?  First  its  comparatively 
simple  character  mun  bo  noted.  There  was 
a  list  of  articles  subject  to  s^peciflc  duties. 
Taxes  on  quantities  of  commodicies,  and  not 

onvalues-iheslmplestkindof  Importduties. 
Thop   taxes  were  very  moit-rate.    Nails  and 
EDikes,  for   example,  were   taxed   one    cent 
per  pound,  molossas   2>»    cents   per   gallon, 
hoots  50  ceuts  per  pair,  hemp  60  cents  p^r  112 
pounds,  co'il  2  cents  per  bushel.    There  were 
three  or  four  classes  of  duties,  based  on 
values,  or  ad  valorem  duties.    One  clafs  paid 
ten  percent.,  another  seven  and  a-half  per 
cent.,  a  small  cla^s  fifteen  per  cent.,  while  «1J 
unspecified  imported  goods  were  taxed  6  per 
cent.    Th^re  was  a  short  free  list.  Including 
important  commodities,  such  as  wool,  cotton, 
dyeing  woods  and  dyeing  drugs,  copper  in 
plates,  and  all  furs.  The  signiOcance  of  these 
rates  becomes  manifest  by  coinparison   with 
the  table  of  ad  valorem  rates  on  dutiable  mer-    j^ 
chandise  enteed  during  the  fiscal  year  end-      ' 
tng  June  SO.  1887.    In  this  table  we  find  that 
the  rates  vary  from  a  little  over  21  per  cent, 
to  154  per  cent. 

Revenue  was  Insufficient  and  rates  were 
raised  about  two  and  one-half  per  cent,  in 
1790.  The  purpose  was  revenue,  and  not  pro- 
tection. The  truth  is,  there  were  scarcely 
nny  manufactures  to  protect  at  that  time 
except  sbiphuildine.  Agriculture  at  d  com- 
merce were  the  chief  pursuits.  Revenue 
nas  still  Insufficient,  and  the  tariff  law  of 
1793  was  p  ssed,  and  this  was  supposed  to 
carry  out  the  intention  of  Alexander  Hamil- 
ton as  expressed  in  his  celebrated  report  of 
the  previous  year   on    manufactures.     The 

.average  rate  of  duties  thus  became  thirteen 

■^g  one-half  per  cent.  » 


I 


I 


/nteinffSr  revenue  taxation  #iir%¥r^?rdco^  i 
In  1791,  and  distillei  spirits  were  taxed,  pro-  I 
ducincrtbe  "whisky  insurrection" in  Western 
Pennsylvania,    Opposition    to  this  tax   was 
manifested  in  several  States,  and  the  grounds 
-*   '^npoaiiion    were     larffoly    those    which 
afirainst  indirect  taxation  in  (general. 
1  1794  internal  taxation  was  extended,  and 
inus  three  new  sources  of  revenue  wer*  in- 
cluded.   The  sale  of  liquors,  the  manufac- 
ture of  snuff  and  auctions  were  taxed.    Car- 
;  were  also  taxed  about  this  time,  and  at 

o  varying  from  $2  each  ptr  year  to  $15 

each  per  year.    Stamp  duties  on  certain  letrai 
papers  wore  aidei  in  1797.    Direct  taxes  on 
lands  and  houses  wore  added  to  the  sources 
of  revenue  towards  the  close  of  the  century. 
Then  direct  and  indirect  taxes  aroused  op- 
position and  were  one  cause  of  the  lall  of 
the    feder  illsls.     They  were    all    abolished 
after  Jefferson  became  President.     Before 
that  they  had    not   been  satisfactorily   ad- 
ministered and   had  not  become  very  pro- 
ictive — to  do  which  reqaires  several  years 
r  a  new  system  of  taxation. 
What  was  the  consequence  of  this  state  of 
thiniyrs?    Precisely  wJiat  might  have  been  cx- 
-^cted.    Import  duties  were  raised  in  1793, 
J.794  and  1797  because  new  demands  were  mado 
on  the  public  treasury  and  revenues  were  in- 
BufiDoieot.    After  internal  taxation  had  been 
swept   away   the   movemenx   became   more 
rapid.    Taxes  on  imports  were  raised  in  1804, 
and  although  this,  like  previous  acts,  was  re- 
garded as  merely  temporary,  it  is  sijrtilflcant 
**that  no  important  duty  once  imposed,  ex- 
cept that  upon  salt,  was  ever  relinquished." 

Well,  duties  on  imports  were  raised  contin- 
ually until  disturbances  with  Eusrland  called 
for  such  larpe  expenditures  that  they  were 
doubled  in  1812,  which,  instead  of  producloK 
more  revenue,  lessoned  exlstinpr  revenue;  for. 
In  the  arithmetic  of  taxation,  two  and  two,  in- 
oad  of  raaklojf  four,  often   make  only  one. 
fter  all,   it  was   necessary  agrain   for  the 
me   party,    which,     in    response   to   pop- 
lar   claraor,   had    abolished    internal    rev- 
luo    taxation,    to     reintroduce    it,    agsin 
jincr     to     the     expense     of    buildinar    up 
suitable  machinery  for  administering  the 
fcystem  and  waiting  for  It  to  begin  to  produce 
iartre  returns.    The   worst   aspect    of    such 
'  Bhifting  policy  is  the  disturbance  of  business, 
under  which  the  weaker  eleinents,  "the  small 
nou,"gotothe  wall,  thus  producing  a  ten- 
enoy   to   monopoly   and    concentration   of 
Tvealth.    The  lesson  to  be  drawn  from  this  is 
)us,  and  corroborates  what  has  already 
1  said.    It  is  essential  to  publio  welfare 
>  a  I  a  Ry  stem  of  taxation  adequate  to  meet 
ictuaLing,  and  on  the  whole  increasing,  de- 
lands  on  the  public  treasury  should  be  main* 
lined.    It  is  not  stated  at  present  what  this 
should  bo.    Our  internal  revenue  taxes  may 
bo  retained  or  something  put  in  the  place  of 
them,  but  in  either  case  the  main  fact  re- 
mains.   Our  duties  on  imports  will  always  bo 
fluctuating,  will  always  tend  to  increase,  and 
will  always  give  opportunity  for  Jobbery  and 
corrupti<m»  fiiuiess  chey  are  based  on  true, 
ratior.ai    pi^ihciplo,   and    to   baso   them    on 
rational  rriooiple  is  impossible   unless  other 
[  f  ruitt'At,  eAutly  prvftnagsd  sources  ef  MT«auo 
1 1  ex  is  I. 

The  duties  up  to  1816  were  for  ravenuo 

vith  inclucntai  proteotion.  but  in  that  year 

i\  Clay  sp'ke  in  favor  of  "a  thorough  and  de 


i 


V 


oTJei  protectlorPfo  home  manufactures  by*^ 
amplo  duties,"  and  his  ally,  }lr.  lugham,  de- 
clared the  revenue  to  be  only  an  '^inciiental 
consideration."  How  did  it  happen  that  the 
old  standpoint  was  completely  reversed  so 
that  the  principle  of  **preteotion,  with  Incl- 
dontal  revenue,"  took  the  place  or  the  prin- 
ciple'*reveuue,iritn  incidental  protection?" 
Tne  event  which  K'd  to  this  chanire  in  policy 
muit  be  describtfd  in  the  article  to  follow. 


\ 


\ 


Furtber  Connideratlr ^  of  the  Subject  by 
Prof.  Kichard  T.  l^iy,  of  Johns  Hop- 
kins Uuiversity. 

[Written  for  the  Baltimore  Sun.l 

ARTICLE  VIII. 

We  have  already  ezamiued  the  first  cause 
'Which  ie4  to  the  establishment  of  protec- 
tionism as  **the  Amf-rican  sygtem."  This 
OAUSe  was  a  faulty  federal  revenue  system, 
lacking  the  first  principle  of  scientific  finance. 
Which  is  flexibiUiy  and  elasticity,    Wc  have  I 

seen  further  that  this  weakness  inheres  of 
necessity  in  any  system  of  national  revenues 
based  almost  exclusively  on  duties  levied  on 
imported  eommoditie?,  because  these   yield 
least  in  evory  critical  juncture.  A  deficit  and 
debt  result  therefrom.    The  question,  then, 
arises,  How  shall  we  increase  revenues?    But 
having  provided  only  one  source  of  revenue, 
we  most   naturally  have  recourse  to  that. 
But     this     is    not     all.     Taxation    moves 
along  the   lino  of  least  resistance,    Adam 
Smith   tells  us    that  in   tlie    days  of  fed- 
erQiism,    government     was    so    weak    that 
only  those  were  taxed  who  were  powerless  to 
resist  taxation;  namely,  the  common  people. 
The  clergy  and  nobility  wero  exempted,  and 
privileged  classes  arose,  as  always   haupens 
under  weak  governments.    But   in    the  case 
of  taxes  on  imported  commodities  there  is  a 
line  along  which  they  can  move  without  en- 
countering any  opjwsition  whatever.    Let  us 
express  ourselves  more   accurately.    There 
may  be  some  opposition,  but  this  is  oppos 
tion  on  thepart  of  the   unorganized    masses 
—"the  forgotten  millions"— while  there  is  an 
organized  body  of  special  interests  urginST  an 
increase  of  taxation  along  this  line.    Govern- 
ment is  entreated  to  tax  those  things  which 
home  producers  desire  to  sell,   in   order  to 
limit     competition.     In    whichever    other 
way     the      legislative      authority      turns 
for    revenue,    powerful   opposition    is   en- 
countered,    while     there     is     no     outside 
pressure     brought     to   bear     to     urge     it 
to  levy  taxes  of  such  a  nature  as  to  interfere 
as  little  as   possible  with  the  pursuits  of  the 
people,  and  to  place  as  small  a  burden  as  pos- 
sible 00  the  ordinary  man.     The  forgotten 
millions  are  besinning  to  organize,  and  this  is 
the  chief    significance    of   bodies  like   the 
Knights  of  Labor.    By  their  very  nature  they 
are  impelled  to  watch  publio  measures  from 
the  standpoint  of  the  people  at  larare,  and  not 
from  the  standpoint  of  special  private  inter- 
ests.   More  will  be  said  about  this  hereafter. 
However,  the  line  of  least  resistance  forth  o 
movement  of  taxntion  is  manifest  in  a  coun- 
try which  relies  for  revenue  mainly,  if  not 
exclusively,  upon  customs   dutKs.    Protec- 
tionism was  the  most  natural  outgrowth  pos- 
sible of  our  system  of  taxation,  and  I  dwell 
upon  this  because  precisely  at  this  time  it  is 
wBssential  that  we  should  understand  those 
principles  which  underlie  cur  financial  de- 
velopment and  make  It  what  it  is.    Otherwise 


f 


\ 


a  repeiitioa  ot  past  "errora  is  sometbinsr  la- 
evi  table. 
.        A  second  cause,  however,  was  powerful  in 
I    the  establishment  of   protectionism  in    the 
\    United  Slates,  and  it  was  this  second   cause 
which  Jed  in  the  first  Instance  to  the  substitu- 
tion of  the  princinle  of  "protection  with  in- 
cidental  revenue,"  for  the  older  principle, 
"revenue  with  incidental  protection,"  and  an 
eiamlnatlon  of   this  cause  Is  of  prime  im- 
^  portance  in  a  study  of  our  tariff  historj'.    I 
'■  refer  to  the  hostilities  between  the  United 
''  States  and  England— and,  to  a  less  extent, 
France— which   finally   culminated   in    "the 
war  of  1812."    Before  these  hostilities    our 
!  chief  pursuits  were  commerce  and  atrrlcul- 
ture,  while  manufactures  were  insiirnificant. 
There  was  more  or  less  manufacturing  indus- 
try, but  it  was  pursued  in  small  shops  where 
j,  the  proprietor  worked  with  his  own  bands, 

I  assisted  by  two  or  three  journeymen  and  one 

II  or   two   apprentices.     There    wus,    for    ei- 
'  ample,   always   the   village   carpenter,    and 

shoemaker  and  the  blacksmith  at  the  country 
cross-roads.  But  manufacturinsr  on  a  large 
scale  could  scarcely  be  said  to  exist,  and  It 
was  even  in  Europe  only  in  the  early  stapes 
of  its  development,  for  the  *MndU8trial  revo- 
lution" had  but  recently  besrun.  Now,  dur- 
ing the  European  wars,  which  centered  first 
about  revolutionary  France  and  later  about 
the  person  of  the  first  Napoleon,  our  com- 
merce developsd  with  a  rapidity  which  is 
I  said  to  be  without  parallel  in  the  world's  his- 
I  tory.  It  was  unsafe  to  send  goods  In 
European  vessels,  as  all  European  powers 
had  their  enemies,  and  ih©  goods  were  con- 
sequently liable  to  capture.  America  was  the 
great  neutral  power,  and  our  commerce  was 
for  some  time  tolerated  under  more  or  less 
vexatious  restrictions.  While  commerce 
was  in  this  troubled  period  of  the 
world's  history  pursued  with  diffi- 
culty, the  relative  disadvantage  of  our 
commerce  was  least.  It  was  estimated  that 
our  advantage,  as  compared  with  the  com- 
I  merce  of  other  countries,  could  be  placed  at 
I  twenty  or  thirty  per  cent.  While  this  condi- 
'  tionof  things  continued,  we  naturally  ab- 
sorbed an  ever-increasing  share  of  interna- 
tional trade.  It  was  equally  natural  that  our 
capital  and  labor  should  bs  attracted  by  the 
rewards  of  expanding  commerce.  The  fol- 
lowing table  will  place  vividly  before  the 
reader  the  result  of  the  events  described 
from  1789  to  1796. 


Year. 

American  tonnage 
employed  in  for- 
eign trade. 

British  tonnage 
employed    in 
American  trade. 

1789 

1792 

1794 

1796 

127,329 

414.679 
525,649 
675,(H6 

94.110 

206,f;65 
37,058 
19.669 

The  American  tonnage  entraged  In  foreign 
trade  increased  up  to  tiie  year  1807,  when  it 
amounted  to  848.306.  A  change  was  then 
forced  upon  American  Industry.  Thestruearle 
between  Franco  and  England  waxed  fiercer 
and  mutual  hatred  became  more  intense. 
Both  determined  that  there  should  be  no 
neutrals,  and  endeavored  to  force  the  United 
States  to  take  sides  with  one  or  the  other.  A 
series  of  measures  were  inaugurated  with 
this  end  in  view.  Thus  Great  Britain  in  1806 
declared  a  blockade  of  all  those  ports  in 
Europe  which  belonged  to  powers  allied  to 
France,  and  Napoleon  followed  this  action 
by  his  "Berlin  decree,"    which   forbade  all 


vessels     from     entering     any   British  har^ 
bor.     England      retaliated     in     1807     with 
the      "orders     in      council,"       aimed      di- 
rectly at  American   vessels,  and  forbidding 
them  to  enter  any  European  harbor  outside 
of  Great  Britain  and  Sweden.    Napoleon  re- 
plied with  hla  "Milan  decree,"  which  ordered 
the  capture  and  sale  of  all  American  vessels 
entering  British  harbor?.   What  was  Amprica 
to   do?    There    were   various   things   which 
might  have  been  done,  but  as  to  what  actu- 
ally was  done,  I  doubt  If  any  American  feels 
proud  of  this  chapter  in  his  country's  history. 
Low  taxes  seemed  to  be  valued  above  every- 
thing  else,  and    no    provision  was   made  by 
Congress   for   maintaining   our   dignity  and 
our  rights  as  a  nation.    The  ponny-wise-and- 
pound-foolish  policy  was    pursued,  with  re- 
sults   even   more   than   usually   disastrous. 
Our  Congress    decided  to     withdraw     the 
assistance  which     our    commerce     offered 
to      the      nations      of       Europe,       hoping 
thus     to    bring    them  to    terms.    It  was  a 
kit;d     of    governmental    "boycott,"    which, 
boomerang-like,     reacted      most      severely 
on  ourselves.    The  embargo  act  of  1807  for- 
bade the  depirture  of  any  American  vessel 
for  a  foreign  port,  and  this  was  followed  by 
the  non-inieroourse  act  of  1809,  which   pro- 
hibited commerce  with  France  and  England, 
but  not  with  other  powers.    This  act  expired 
in  1810,  but  was  revived  against  Great  Britain, 
which  continued  its  hostile  actions  until  the 
outbreak  of  the  war  of  1812.    This  war  was 
the  most  complete  kind  of  prtitectivjn,  for 
commerce  with  England  was  by  us  declared 
unlawful,  and  our  ports  were  blockaded  by 
Englandl 

Our  commerce  was  crippled,  and  as  early  as 
18U8  a  marked  change  in  xhc  character  of  our 
industrial  llfowasvisible.The  capital  and  labor 
which  formerly  had  obtained  employment  in 
international  trade  was  diverted  to  manufac- 
tures. "A  commercial  war,"  eavs  Professor 
Henry  C.  Adsms,  "ia  always  propitious  for 
the  establishment  of  new  industries),  and  la 
the  present  case  Ithere  was  developed  an  in- 
tense desire  to  maintain  by  law,  after  the 
cessation  of  hostilities,  those  conditions 
which  secured  to  Industries  control  over  the 
home  market.  Then  for  the  first  time  was  it 
that  protection  as  an  Independent  industrial 
system  forced  its  way  into  the  history  of  the 
United  States." 

The  exports  from  the  country  during  the 
years  1808  to  1814  declined  from  a  little  over 
one  hundred  and  eight  millions  of  dollars  to 
less  tnan  seven  millions,  and  revenues  from 
customs  and  tonnage  from  a  little  over 
twenty-seven  millions  to  less  than  five  mil- 
lions. 

"Establishments  for  the  manufacture  of 
cotton  sroods,  woolen  clothes,  iron,  glass,  pot- 
tery and  other  articles  sprang  up  with  a 
mushroom  growth."  These  are  words  used 
by  Professor  Taussig,  from  one  of  whose 
works  on  the  tariff  1  take  the  following 
statistics  showing  the  growth  of  the  cotton 
industry  during  the  war  period.  There  were 
but  four  cotton  factories  in  this  country  in 
1803,  when  new  machinery  and  new  methods 
began  to  be  introduced.  In  1805  the  number  of 
spin.Ues  was  4,500;  in  1807,  8,000;  in  1809,  31,000; 
in  1810,  87,000,  and  in  1815,  130,000. 

When  the  war  with  England  was  brought 
to  a  close  our  commerce  had  been  in  consid- 
erable part  destroyed.  Capital  and  labor  had 
been  diverted  to  manufactures,  but  these  had 
been  established  under  aonormal  conditions. 


They  had  now  to  face  the  oompetltiou  of 
Europe,  and  in  particular  of  Eo«iond,  whose 
stores  of  oommodities,  lonir  pent  up  by  war, 
besan  to  flow  oyer  the  world,  and  in  quanti- 
tlea  In  exceaa  of  the  power  to  pvirchast)  them 
on  the  part  of  oon8ijaiers.  The  manufactur- 
ers cried  out  for  protection  to  their  "iufant 
industries"  agralnst  the  old-established  indus- 
tries of  Europe,  and  tlieir  cry  was  beard.  A 
D  .Esible  jvlternatlvo  course  of  action  must  be 
discussed  in  the  followingr  article. 


PROBLEMS   OF   TODAY. 

PROTECTIONISM         KEYIEWED. 


ITS    PAST    AND    PRESENT    FEATURES. 


Continued  Dlscnssion  of  the  Subject  by 
Professor  Richard  T.  Ely. 

[Written  for  the  Baltimore  Sun.l 

ARTICLB  IX.  j 

The  industrial  situation  In  the  United 
States  at  the  close  of  the  war  of  1813  was  a 
tryinsr  one,  presentin?  problems  which  re- 
quired for  their  successful  solution  states- 
ronnship  of  a  hlRh  order.  Now,  statesman- 
ship of  a  hisrh  order  does  not  mean  merely  the 
ability  to  lead  men,  but  the  ability  to  lead 
them  in  a  direction  which  subsequent  events 
pro%'e  to  be  the  right  direction.  It  Is,  how- 
eVer,  possible  ooly  for  those  to  forecast  with 
a  reasonable  desrree  of  probability  future 
events  in  the  life  of  a  nation  who  have  a 
profound  knowledge  of  the  causes  at  work 
which  are  shaping  national  destiny  and 
makinf?  it  what  it  is.  We  are  now  speakinsr 
of  industrial  development,  and  the  science 
which  treats  of  this  is  political  econ- 
omy, one  of  the  most  diflBcult  sciences 
to  master  in  its  various  ramifications.  We 
see,  then,  how  much  is  required  in  a  man  to 
give  such  character  to  his  political  activity 
that  it  shall  wear  permanently  the  mark  of 
statesmanship.  There  must  be  leadership 
with  all  the  rare  and  admirable  qualities 
which  that  implies,  and  this  must  be  accom- 
panied by  action  based  on  a  profound  insiprht 
into  the  nature  of  social  and  economic  forces 
at  work  both  ib  the  nation  and  in  the  world 
at  larfire. 

Great  as  were  the  men  of  the  first  half  of 
Ibis  century.  In  the  llRht  of  present  events  It 
must  be  acbnowledjred  that  anythiner  which 
can  fairly  be  called  statesmanship  was  rare 
Indeed  amoni?  them. 

The  year  1816  witnessed  the  firm  establish- 
ment of  the  protectionist  theory  as  "the 
Ameilban  system." 

Protection  tomRnufaoturinfir  Industries  had 
not  oome  of  our  deliberate  and  carefully- 
formed  purpose.  First,  as  we  have  seea,  the 
thought  of  our  leaders,  with  Hamilton  at 
their  head,  was  this:  We  must  have  revenue, 
and  If,  in  raisiiiar  this  revenue,  we  tax 
Imported  commoditips  of  a  kind  produced  at 
homo,  and  make  importers  pay  from  five  to 
fifteon  per  cent,  on  the  bulk  of  Imports,  our 
home  industries  will  receive,  merely  as  an 
incidental  matter,  a  slight  protection,  and  it 
is  well  that  iboy  should  be  thus  favored. 

This  was  a  mistake,  for.  srrantinR  the  prin- 
i  ciple,  a  way  was   opyned  for  its  subsequent 


f  KfJWth,      The  principles  which  uistinKuisn 
i  between  a  tariff  for  revenue  only  and  a  tariff 
[lor  proteotion  are  radical,  and  it  Is  not  easy 
'  to   combine  the  two.    Perhaps  it  is  not  too 
much   to  say  that  any  attempt    to   do  so 
amounts  to  a  victory  of  the  principle  of  pro- 
tection. 

When  the  first  tariff  bill  was  under  discus- 
sion In  Congress,  Mr.  Clymer,  of  Pennsyl- 
vania, appears  to  hare  been  gifted  with  an 
Insltfht  comparatively  rare,  for  he  wished  the 
bill  separated  into  two  parts.  The  one  part  was 
to  be  a  revenue  bill,  and  was  to  be  shaped 
with  reference  to  revenue  principles  solely.  , 
Other  matters,  such  as  protection  to  infant 
industries,  were  to  be  considered  by  them- 
selves, and  on  their  own  merits.  This  was 
entirely  rational,  and  if  protectionism  is  de- 
•irable,  this  Is  the  proper  scientiflo  method 
for  affording  it.  The  question  now  Involved 
is  not  protectionism  or  free  trade;  but,  if 
protectionism  is  desirable,  bow  shall  we  es- 
tablish it. 

The  disadvantac-es  of  taxes  on  Imported  com- 
modities are  many.  One  of  the  chief  of  them 
is  that  it  compels  us  to  move  about  blindly 
In  the  dark  without  power  to  estimate  fully 
the  consequences  of  our  own  acts.  We  pay 
taxes  to  encourage  manufactures,  but  the 
extent  of  the  burden  we  carry  no  man  knows, 
because  we  are  operating  in  violation  of  that 
canon  of  taxation  which  prescribes  that  taxes 
should  take  out  and  keep  out  of  the  pockets 
of  the  people  as  little  as  possible  over  and 
above  what  flows  into  the  public  treasury. 
"We  pay  a  tax  which  goes  to  the  government 
and  is  returned  to  us  In  the  inestimable 
benefits  which  good  government  confers, 
but  we  pay  another  tax  in  increased  prices  of 
commodities,  and  we  cannot  ascertain  the 
precise  amount  of  this  burden.  It  contains 
fiome  of  the  worst  evils  of  indirect  taxation 
■which  have  been  already  described.  It  is 
covert,  it  takes  from  us  in  sly  pick-pocket 
fashion,  and  we  never  know  the  cause  of  our 
diminished  fortuoesi  The  ordinary  man 
simply  feels  that  something  is  wrong,  but  he 
cannot  tell  what  it  is.  The  Sun,  in  its 
Friday's  article  on  'The  Cost  of  It," 
gave  an  estimate  to  the  effect  that 
■we  pay  to  government  only  one- 
fourth  of  the  total  burden.  In  other  words, 
if  this  estimate  la  acouratie,  for  every  dollar 
we  pay  into  the  federal  treasury  we  pay 
three  more  in  higher  prices  than  would 
otherwise  be  necessary  to  home  producers, 
and  instead  of  an  apparent  burden  of 
$217,286,893,  we  are  bearing  an  actual  burden 
of  $880,000,000. 

The  second  false  step  waff  made  In  the  es- 
tablishment of  an  inadequate  system  of 
federal  finance  already  sufficiently  elabo- 
rated in  these  articles.  It  Is  only  necessary  to 
remind  the  readers  of  Thk  Sun  of  the  fact 
that  Its  nature  was  such  as  to  compel  a 
recourse  to  customs  duties  for  the  increasing 
demands  of  government. 

The  manufacfurers  of  1818  wanted  protec- 
tion, and  pleaded  for  their  Infant  industries, 
and  this  argument  told,  for  the  protection 
afforded  them  was  originally  limited  to  a 
short  period.  The  duty  on  cotton  and  woolen 
eroods  was,  for  example,  raised  to  twenty- 
flve  per  cent.,  but  this  was  to  hold  only  until 
1819,  when  It  was  to  be  reduced  to  twenty 
per  cent.,  which  was  about  the  averasre  rate  ■ 
^^under  the  act  of  1816.  Calhoun  defended 
Ithlft protective  measure  on   the  srround    that 


Infant  Industries  requliia  f  Bl'^'^iRatenbg'  caro 
lOf  -irovernment.  It  is  -  Contended,  how- 
[bver,  by  free-traders  that  real  In- 
fant Industries  never  pet  any  protection, 
but  In  the  tumultuous  clamor  of  special  pri- 
vate interests  only  toe  powerful  can  hope  to 
receive  Brovernment  aid.  There  is  much  in 
our  history  which,  so  far  as  it  btops,  tends  to 
eubstantiate  this  view.  Every  one  knows 
that  instead  of  gradually  lowerincr  the  duties 
levied  for  the  sake  of  infant  industries  as 
they  proarressed  toward  adolescence  and  ma- 
turity the  protective  duties  were  raised. 
The  more  they  sroti  the  more  they  wanted, 
and  the  twenty  per  cent,  duty  of  1816  would 
be  scorned  in  18881 

Yet  we  must  not  lose  sight  of  the  facts  of 
the  case.  What  was  to  be  done?  Two  false 
gtexw  taken  by  Conerress  have  bden  men- 
tioned, but  more  powerful  was  the  war  of 
1813,  with  tho  precedinsr  events  which  led  to 
It.  This  war  period  was  in  Itself  the  stronsrest 
kind  of  protection,  and  manufacturers  grew 
up  under  this  protection,  which  came  not  by 
our  action,  but  In  spite  of  ourselves.  Should 
these  manufactures  be  allowed  to  perish 
their  capital  to  be  destroyed,  in  part  at  least, 
and  should  the  labor  which  they  afforded 
employment  be  cast  adrift?  Contrress  replied: 
No!  Protectionists  say:  "Yes,  your  free- 
trade  theory  will  be  all  riorht  when  you  have 
established  perpetual  peace  Detween  nations, 
but;that  Utopia  has  not  yet  been  attained, 
and  until  human  institutions  are  radically 
chanfired  war  will  from  time  to  time  Inter- 
fere with  the  plans  pf  you  free-traders  and 
disturb  that  international  division  of  labor 
upon  which  you  predicate  their  beneficence. 
Yes.  When  you  can  guarantee  perpetual 
peace  we  will  become  free-traders:  in  the 
meantime  we  will  adhere  to  protection.  Free 
trade  is  cosmopolitan  and  visionary.  Pro- 
tection Is  national  and  practicall" 

This  is  about  the  way  Frederick  List 
arprues  in  his  National  System  of  Political 
Economy,  and  he  strikes  me  as  the  ablest  of 
the  protectionists.  The  proposition  of  Mr. 
Clymer  shows  us  a  poa><ibIe  alternative  to  the 
Bourse  actually  loUuwed  by  Congress.  It 
would  have  been  entirely  practicable  to  have 
separated  the  question  of  reyenues  from  that 
of  protection.  We  could  have  afforded  pro- 
tection by  bounties  to  home  manufacturers, 
and  have  encourajred  them  by  awards  of 
largo  prizes  of  one,  two,  three,  or  even  four 
hundred  thousand  doUar^^  for  improved  in- 
dustrial processes  and  for  superiority  of 
product.  This  is  a  plan  which  could  be  more 
easily  carrier!  out  than  our  tariff  system,  and 
If  protection  i3  desired,  the  more  carefully  it 
is  examined  the  more  it  must  commend  itself 
to  the  impartial  student.  Forelcrn  producers 
would  not  be  excluded,  but  the  bounty  could 
be  made  to  equal  the  disabilities  of  a  state  of 
infancy.  We  would  pay  it  with  open  eyes, 
and  would  know  precisely  what  our  Infants 
cost  us,  and  could  balance  this  burden  over 
aarsinst  the  advantages  which  ihey  confer 
upon  us.  We  could  watch  the  progress  of 
manufactures  from  the  state  of  infancy 
through  youth  to  full  maturity,  and  make 
bounty  at  every  period  proportional  to  its  own 
weaknesses  as  compared  with  the  strength  of 
foreieners,  and  we  could  do  this  with  fuU 
consciousness  of  what  we  were  about. 

Or  we  might  exempt  all  manufacturing  es- 
tablishments like  federal  bonds  from  all  tax- 
ation, national,  State  and  local.    As  all  for- 


eign manufacturers  are  staggering   under  a 
heavy  load  of  taxation,  thig  would  be  an  im- 
mense help  to  home  producers.    We  could 
•in  this  case  also  ascertain  tho  exact  amount 
of  our  burden.    We  might  assess  all  manu- 
facturers so  exempted  from  taxation  every 
year,  and  by  calculating  what  they  would 
pay  If   not  exempted  we  wouH  know  how 
much   assistance   we  were  giving.      Prices 
would  not  be  raised  by  this  sort  of  protec- 
tion to  infant  Industries. 

These  devices  are  mentioned  as  possible 
and  practicable  alternatives.  It  is  not  In- 
tended to  recommend  them,  nor  is  it  desired 
to  condemn  In  this  place  and  at  this  time. 

Still  another  possible  alternative  in  1816 
was  to  let  the  mauufaoturers  shift  for  them- 
selves like  othe^lpeople,  and  adapt  them- 
selves to  changed  conditions  as  best  they 
might.  More  will  be  said  about  this  plan 
hereafter. 

TARIFF  AND  FAVORITISM. 

Prof.  RIchd.  T.  Ely  Tells  How  Favorites 
FlonriKhed  Under  Tariff   Legislatiou. 

rWritten  for  the  Baltimore  Sun.l 

ARTICLE  X. 

In  my  last  article  I  stated  that  tbe  proposi- 
tion of  Mr.  Clymer  favoring  a  separation 
of  revenue  measures  from  other  political 
schemes  showed  that  there  was  a  possible  al- 
ternative to  the  course  actually  followed  by 
Conerefig  in  the  firm  establishment  of  protec- 
tionism in  1816.  There  were,  in  fact,  several 
alternatives,  and  two  of  them  have  been 
described.  One  was  the  bounty  system  and 
the  other  the  plan  of  special  exemption  from 
all  taxation,  either  of  which,  it  was  argued, 
was  preferable  as  a  scheme  of  protection 
when  looked  at  in  the  light  of  reason.  It 
still  remains  to  be  considered  whether  it 
would  not  have  been  better  to  have  refused 
any  interference  in  behalf  of  manufacturers 
and  to  have  allowed  them  to  adjust  them- 
selves to  new  conditions  as  best  they  mlKht, 
as  other  people  are  forced  to  do,  and  thus  to 
have  established  with  respect  to  manufactur- 
ers In  general  the  policy  of  non-interference. 

This  is  a  matter  of  present  Interest  because 
the  question  of  general  policy  Is  coming  up 
again  and  is  certainly  to  be  raised  repeatedly 
in  the  near  future.    First,  It    must   be   rer 
niarked  that  a  liberal  policy  with  respect  to 
trade  and  non-intervention  In   general  has 
been  Injured  by  those  extremists  who  claim 
too   much.     Doctrinaires    say  government 
should  do  as  little  as  possible,  and  that  is  the 
best  government  which  governs  the  least. 
Yet  when  we  see  the  English  laboring  classes 
elevated    by  factory    legislation    protecting 
the  laboring  .classes  by  restricting  the  labor 
of    women    and    children    and    prohibiting 
**pluck-me  stores"  and  payment  in  kind,  and 
thus  the  theories  of  radical  socialists   like 
Carl    Marx  discredited,   for   they  say   that 
the   workingmen    have     nothing     to    hope 
from   the  present  state:    when   we  witness 
somewhat  similar  beneficial  effects  in  Mas- 
sachusetts   and  New  York,  and   when   we 
reflect  on  the  inestimable  benefits  of  our  free 
public  school  system  even  when  reviewed  ex- 
clusively from   the  standpoint  of   material 
wealth;   when  wo  Icarn  that,  doctrinaires  to 
the  contrary  notwithstanding,  municipalities 
are  to  increasingextent  supplying  themselves 
with  gas  without  the  Intervention  of  corpo-  I 
wjations,  and  that  with  the  most  satisfactory'  | 


results— when  we  contemplHte  all  I  these 
things  we  are  too  inclined  to  reject  the  entire 
policy  of  non-intervention  and  favor  irovern- 
ment  Interference  everywhere.  It  is  neces- 
BAry  !o  discriminate.  One  law  KOverns  those 
Dursuita  which  are  monopolies,  another  those 
which  are  always  subject  to  the  steady,  con- 
stant pressure  of  competition,  while  yet  a 
third  principle  prevails  with  reference  to 
labor,  and  in  sreneral  it  may  be  said  of  pur- 
suits which  are  stronprly  , competitive  that 
competition  lain  the  main  a  sufficient  resru- 
lator,  and  that  so  far  as  they  are  con- 
cerned that  government  is  best  which 
Ifoverns  least. 

"DurinjTthe  present  century,"  says  adis- 
criminatlnsr  writer,   "two  Kreat   discoveries 
have  been  made  in  the  science  of  firovern- 
ment.    The  one  Is  the  Immense  advantage  of 
aboUahlng  restrictions  upon  trade;  the  other 
is  the  absolute  necessity  of  imposinjf  restric- 
tions upon  labor."    He  Avould  have  expressed 
his   meaniner  more   clearly  if   he   had   said 
"upon  labor  In  behalf  of  labor,"  for  he  had 
In  view  ret? ulations  increasing-  real  freedom. 
W  hlle,  then,  only  an  extremist  will  support 
the   proposition  of  non-intervention   as  of 
universal  application,  the  impartial  student 
of  American  affairs  can  hardly  fail  to  see  his 
inclination  strengthen   in   favor   of   lettinj? 
commerce  and  manufactures  take  their  own  I 
course  without  legislative  interference,  the 
more  minutely  he  examines  our  present  con- 
dition and  its  historical  antecedents,  for  he 
will  find  that  the  best  laid  plans  for  fostering 
infant  industries  and  building  up  a  barrier 
between  American  labor  and   the  so-called 
"pauper  labor"  of  Europe  come  to  naueht. 
It  is  scarcely  possible  to  carry  them  out,  and 
in  the  end  the  hard-workinar,  thrifty  indus- 
trial class  of  employers  and  employes  alike 
are  hampered  In  their  efforts  to  gain  a  liveli- 
hood, while  enormous  trusts  and  syndicates 
are  formed,  crushing  as  with  an  iron  hand  the 
independent     manufacturer,   and    grinding 
down  American  labor  by  bringinjr  into  Com- 
I)etitioa  with  It  Ignorant   and  lawless  Eu- 
ropean hordes,  which  have  been  brought  into 
the  country  free  of  all  duty. 

The  infant  industry  theory  finds  its  cl»8sl- 
cal  statement  In  these  words  in  John   &tuart 
1  Mill's    treatise  on  political  economy:    "The 
expenses  of  production  being  always  greatest 
ai  first,  it  may  happen  that  the  home   pro- 
duction,   though    really  the    most    advan- 
tageous, may  not  become  so  until  after  a  cer- 
tain duration  of  pecuniary  loss,  which   it  is 
not  to  be  expected  that  private  speculators 
should  incur  in  order  that  their  successors 
may  be  benefited  by  their  ruin.    I   have, 
therefore,  conceded  that  In  a  new  country  a 
temporary  protecting  duty  may   sometimes 
be   economically   defensible;   on   condition, 
however,  that  It  be  strictly  limited  in  point 
of  time,  and  provisions  bo  made  that  during 
the  latter  part   of  Its  existence  it  be  on  a 
gradually  decreasing  scale.    Such  temporary 
provision   la   of  the  same    character  as  a 
patent,  and  should  be  governed  by   similar 
conditions." 

This  is  precisely  what  during  the  first  half 
of  our  national  existence  we  proposed  to  do, 
and,  as  has  been,  stated  tariff  laws  were  up  to 
a  lew  years  limited,  and  laws  have  actually 
beet  passed  contemplating  a  gradual  reduc- 
I  tion  of  tariff  duties,  with  the  Intention  of 


thus  entering  upon  a  permanent  free-tra 
period.  But  our  history  has  been  of  suc^ 
character  as  to  lead  one  to  doubt  the  practica- 
bility of  the  infant  Irfdustry  theory.  A  tariff 
law  passed  for  two  years  is  extended  and 
duties  raisoi  before  we  scarcely  enter  our 
national  existence,  and  the  fate  which  thus 
overiooK  Hamilton's  "temporary"  inorense  of 
duties  has  been  repeated  again  and  again.  It 
is  true  that  a  rational  system  of  federal  flnan- 
cierinfiT  might  have  helped  matters  somewhat, 
but  even  if  we  should  be  led  to  adopt  better 
financial  methods  have  we  reason  to  hope 
that  exi)erience  in  the  near  future  will 
be  different?  The  theory  of  our  institu- 
tions is  that  municipal  councillors,  State 
legislators  and  Federal  Congressmen  meet 
to  discuss  the  public  welfare  calmly  and 
Impartially,  and  to  pass  such  laws  as  they 
may  regard  beneficial  to  the  people.  The 
truth  Is  the  initiative  in  legislation  in  general 
does  not  come  from  the  legislator,  but  from 
the  pressure  of  some  powerful  external 
special  Interest.  Go  to  an  ordinary  legisla- 
ture or  city  council  with  a  measure  and  you 
will  be  asked  who  is  back  of  it,  who  wants  it 
passed,  and  what  is  the  consideration?  If 
you  simply  come  with  the  general  welfare  at 
heart,  and  have  no  great  organization  with 
votes  at  your  back,  your  reception  "will  be  a 
cold  one.  Now  so  long  as  this  is  so,  how  can 
it  be  expected  that  governmental  aid  will  be 
withdrawn  Just  in  proportion  as  those  who 
receive  it  grow  strong?  That  is  the  theory, 
but  on  the  contrary  the  pressure  for  aid  in- 
creases as  strength  increases.  Can  one  in- 
stance in  all  the  history  of  the  Ameri- 
can tariff  be  adduced  where  protection 
was  offered  to  aid  In  the  establissh- 
ment  of  an  industry  not  already  In  existence? 
I  think  not  one,  yet  this  is  what  the  theory 
calls  for.  The  idea  is  that  after  canvassing 
the  situation.  Congressmen  say:  "Our  natu- 
ral resources  are  such  that  we  ought  to  have 
a  beet-root  sugar  industry,  for  example.  Yet 
not  a  trace  of  such  industvy  exists  on  account 
of  the  enormous  difficulties  in  the  way  of  its 
establishment.  Let  us,  therefore,  tax  im- 
ported sucrar  togivd  our  would-be  produoars 
a  chance." 

The  actual  practice  is  this:  Representa- 
tives of  powerful  establishments  go  to  Wash- 
ington and  say:  "We  have  large  paper  mills 
in  the  Connecticut  valley  or  elsewhere,  and 
we  wish  to  bo  protected  against  foreign 
competition.'*  It  will  readily  be  seen  how 
akin  this  is  to  the  monopolistic  spirit,  for 
monopoly  means  simply  absence  of  competi- 
tion. 

Several  things  are  proved  by  this  "brief 
sketch  which  any  one  snecially  Interested 
will  find  more  amply  demonstrated  in  Taus- 
sig's "Protection  to  Young  Industries."  One 
is  that  protective  tariffs  did  not  give  us  our 
manufactures.  They  came  into  existence 
wlihout  It.  The  question  of  free  trade  versus 
protection  Is  not  at  all  a  que-^tion  of  manu- 
factures or  ^o  manufactures.  Nor  Is  it  a 
question  of  a  deversifled  or  homogeneous 
Industrial  life. 

We  see,  further,  that  protective  duties  onc9 
esta  blished  tend  to  Increase,  and  that  a  ireat- 
ny?iitof  the  tariff  in  accordance  with  scien- 
tific principles  is  at  least  very  dlflaoult,  if  not 
iroposaiblo.  A  recent  careful  writer  says  that 

tho  theory  of  protection  is  not  altogether 

■II  i  .1  I— I- -jfe.-  -.11. 


erroneous   could  it  be  applied,  Tt)ut  tie  noma 
that  no  modern  parliament  or  congress  can 
be  trusted  to  apply  it,  and  on  that  account 
be  r^ects  protectionism  in  practical  politics. 
Why  is  it  that  the  more  protection  one  has 
the  more  one  wants?    The  reason   is   this: 
Manufacturers  may  be  divided  into  several 
classes  with   respect   to   profits.    There  are 
those  advantageously  situated  and  skillful 
and     enerifetic— ffreat    industrial      leaders 
These  men  require  no  special  help,  and  they 
belong  to  the   first  class.    There  are  those 
;  whose  profits  are  a  little  smaller  on  account 
of  inferior  natural  advantages  or  inferior 
mental  qualifications.    These  are  manufac- 
turers ot  the  second  class.  So  proflts  descend 
until  In  every  pursuit  you  find  those  '*on  the 
rajrtred  edge"  who  but  just  live,  who  barely 
*'keep  their  heads  above  water,"  as  we  say. 
Prices  are  high  enough  to  enable  these  man- 
I  ufacturers  of  the  lowest  grade  to  live,  and 
the    profitableness  of   another  business   la 
j  measured    by   the   differences   between    Its 
1  cost  of  production  and  the  cost  ol  production 
!  In    those    establishments  which    Just    keep 
1  ^live,  so  the  lower  the  scale  of  IneflBcienoy, 
t  the  higher  the  profits  of  the  favorably  Bitu«_ 
ated.    Let  these  lines  rfeprw^sent   tl^e  jorlous 
frradea  of  manufactures  in  the'dtflteTl'States: 


Profits  of  class  1  will  be  measured  by  the 
distance  between  1  and  6.  Now,  if  you  wipe 
out  6,  it  must  be  by  lower  prices,  and  thus 
will  the  abnormally  high  profits  of  class  1 
fall.  Now,  under  a  system  of  free  trade,  the 
operations  of  those  advantageously  situated 
will  be  extended  and  those  working  In- 
efficiently will  be  compelled  to  exert  them- 
selves and  produce  better  and  cheaper  goods 
or  to  change  their  occupation.  :The  question, 
then,  at  issue  is  this:  Shall  we  have  only 
manufacturers  of  a  high  degree  of  efficiency, 
or  shall  we  also  raise  up  and  keep  in  exist- 
ence an  Inferior  class  of  men?  Manufac- 
tures we  are  certain  to  have,  for  we  are  more 
advantageously  situated  than  other  countries 
with  respect  to  some  branches  of  industry, 
and  there  is  probably  scarcely  any  line  of 
manufactures  which  could  not  be  pursued  in 
some  favored  spot  by  some  one. 

Now  it  must  be  manifest  that  the  more 
efficient  the  labor  and  caoital  of  the  country 
the  more  we  will  all  have  to  enjoy  and  the 
greater  our  opportunities  for  leisure.  What 
is  produced  now  is  not  sufficient  by  any 
means  to  satisfy  all  rational  wants  of  all 
men.  Much  more  must  be  produced  for  that 
purpose,  and  if  what  is  produced  is  often  not 
consumed,  owing  to  the  absence  of  purchas- 
ing power  on  the  part  of  the  masses,  this  Is 
another  matter,  and  the  difficulty  cannot  be 
remedied  by  protective  tariffs. 

The  extension  of  aid  to  manuracturers  In 
1816  accustomed  us  to  look  upon  it  as  our 
duty  to  tax  ourselves  for  the  benefit  of  cer- 
tain pursuits,  whereas,  if  they  are  natural  to 
the  country  and  desirable,  they  e\n  be  profit- 
ably established  without  help.  The  pauper 
KPirit  has  been  nourished  and  it  appears  to 
have  worked  like  free  soup-houaes  on  the 
ipoor.  Some  business  men,  instead  of  bending 
all  their  energies  to  the  production  of  cheap 


and  good  commodities,  are  always  plotting  to  [ 
get  something  from  the  public  purse.  Thus  j 
towns  are  induced  to  bid  against  one  another 
for  railroad  facilities,  and  our  federal  govern- 
ment has  been  pursuaded  to  part  with  the 
heritage  of  the  people  *'to  encourage"  rail- 
road building,  whereas  it  would  seem  desir- 
able, if  we,  the  people,  i>ay  for  the  roads,  that 
we  should  own  them. 

When  channres  in  productive  processes  In- 
jure skilled  workingmen  we  say  they  must 
suffer  quietly  and  be  content,  because  the 
general  public  gains.  If  a  type-setting 
machine  should  render  the  skill  of  type- 
setters superfluous,  it  would  produce  Im- 
mense sufferinsr,  but  we  would  not  subsidize 
them  from  the  public  treasury,  or  levy  a  tax 
for  their  benefit  of  one  hundred  and  fifty  per 
cent  on  those  using  the  machine.  Working-  | 
men,  on  the  contrary,  are  severely  rebuked 
when  they  resist  improvements. 

When  the  elevated  railroads  in  New  York 
Injured  property  owners,  the  claim  for  dam- 
ages was  resisted  on  account  of  the  public 
good.  So,  at  the  close  of  the  late 
war,  thousands  upon  thousands  of  farmers 
were  well-nigh  ruined,  and  many  of  them 
completely  so,  by  the  contraction  of  the  cur- 
rency, which  lowered  the  price  of  their  farms 
and  raised  the  value  of  all  existing  mort- 
gages until  often  the  mortgage  equaled  the 
value  of  the  farms.  Yet  farmers  were  not 
indemnified  on  account  of  their  less. 

Is  it  not,  then,  better  to  exclude  favoritism 
in  legislation,  and  to  let  each  industry  stand 
on  its  own  bottom? 


PKOBLEMS  OF   TODAY. 


PROTECTIONISM     AND     LABOR. 


MONEY-MAKING  AND   WAGE-EARNING. 


Pi-of.  Richard  T.  Ely  Shows  How  a  High 
TarifT  Governiiieut  Worka  Against  the 
Workiugiuau. 

[Written  for  the  Baltimore  Sun.l 

ARTICLE  XI. 

As  time  went  on  the  plea  that  protection 
should  be  afforded  to  the  "infant  industries" 
of  the  United  States  grew  ridiculous,  and  its 
advocates ,  began  to  cast  about  for  an  argu- 
ment which  would  meet  with  some  other 
reply  than  a  sarcastic  smile.  Manifestly  the 
period  of  Infancy  must  end  some  time,  and 
the  infant  industry  argument  is  based  pre- 
cisely on  the  hyp  )thesis  that  protection  is 
merely  a  temporary  need. 

The  infant  industry  plea  Is  not  often  heard 
now,  and  may  be  regarded  as  decidedly 
antiquated.  iLet  occasionally  echoes  of  the 
old  war  cry  of  the  protectionists  are  still 
heard.  Although  they  are  so  feeble  as 
scarcely  to  deserve  notice,  it  may  be  well  to 
devote  just  a  word  to  them. 

First,  oue  hundred  years  of  protection 
ought  to  have  developed  our  industry  beyond 
the  stage  of  infancy  if  protection  ever  can 
do  it. 

Second,  the  arguments  which  make  for  pro- 
tection to  industries  in  a  younir  and  enter- 
prising but  poor  country,  and  which,  indeed, 
in  such  cases.  If  intelligently  applied  may 
Justify     it,     no      longer      holds      in      the 


*i 


United     States.     1*;  neeael. 

It  l8  said,  because  the  puiHurs,  tinhoujrh  nat- 
urally remunerative,  cannot  become  so  for 
eeveral  years,  and  men  want  Immediate  re- 
turns. This  is  true  in  a  now  country,  but  It  ia 
rot  true  with  us.  We  have  many  men  in  the 
United  States  whose  pursoa  are  as  long:  as 
those  which  can  be  found  anywhere,  and 
whose  minds  are  as  shrewd  as  those  of  for- 
eign cipilalists.  If  it  is  a  mere  question  of 
who  is  able  to  hold  out  longrest  in  a  comDeti- 
tive  contest,  American  capitalists  need  no 
ftssiatHnce.  They  are  quite  competent  to 
look  out  for  themselves.  Nor  is  it  true  that 
immediate  returns  are  desired.  Almost  un- 
limited monly  can  be  obtained  In  the  United 
States  for  enterprises  which  promise  even 
after  years  to  yield  larcre  returns.  Let  us  ex- 
amine a  few  evidences  of  this  fact: 

Why  is  it  that  lonjr-tirae  loans  are  more 
valuable  than  short-time  loans?  It  micrht  be  i 
supposed  that  if  a  federal,  state  or  municipal 
trovernment  owes  me  some  money  I  would 
want  it  at  once,  and  sayr'the  sooner  I  am  paid 
the  bettor."  But  the  contrary  is  the  case.  I 
say,  "the  later  the  date  of  payment  the  better 
pleased  I  shall  be."  It  is  because  capital  is  ; 
so  abundant  that  people  are  jflad  to  part  with 
its  use  for  a  lon^  term  of  years  if  they  can 
be  Buaranteed  a  small  annual  payment.  liook 
at  the  readiness  with  which  people  advance 
money  for  canal  schemes  and  other  flrreat  im- 
provements in  the  hope  that  they  will  after 
years  become  profitable.  A  few  concrete 
Instances  will  help  to  make  this  plain.  In 
conversation  with  a  jfreat  capitalist,  he  men- 
tioned to  me  In  connection  with  a  certain 
scheme:  *'l  told  H.  that  if  ho  wanted  to  do  a 
noodtninjr  for  himself  and  the  country  that 
was  a  good  opportunity.  I  told  him  that  he 
must  expect  to  lose  money  for  ten  years,  but 
that  then  he   would  beerin  to  make  money." 

A  company  in  New  York— and  it  practi- 
cally, I  am  told,  consists  of  one  man— has 
been.preparintr  a  great  dictionary  of  the  Eng- 
lish'language  for  publication  for  years.  It 
has  spent  thousands  of  dollars,  and  I  am 
inclined  to  think  even  hundreds  of  thousands, 
already,  and  has  not  received  one  dollar  la 
return,  because  the  work  has  not  yet  seen  the 
lieht.  Nevertheless,  it  continues  to  spend 
money  by  the  thousand,  and  seems  perfectly 
8^jti«fled  in  the  prospect  of  a  lai'ge  future 
profit. 

When  I  was  traveling  in  the  North  once  I 
met  a  gentleman   from    Virginia  who   was 
managing  a  larure  farm  there,  owned  partly 
by  himself  and  partly  by  two  capitalists.  The 
iirrangemont  was  that  he  should  manage  the 
Virgifjia  farm,  receive  a  certain   cash  sum 
every  year,  spend  whatever  ho  might  deem 
desirable  in  improvements,  and   then  divide 
the  surplus.    It  so  happened,  however,  that 
this  gentleman    also    owned    a    farm     in 
New  York  State,  where  he   had   formerly 
lived,     and      to     which     he      was     anx- 
ious   to    return.     Now,    as    It     bad    been 
agreed  In  case  of  dissatisfaction  thai  the  dis- 
satisfied Darty  must  buy  the  other  out  at  an 
appraised  valuation,  ho  decided  to  spend  so 
much  in  Improvements  every  year  that  there 
ghould  be  no  surplus  to  divide.    This  he  did 
year  after  year,  yet  the  two  capitalists,  who 
occasionally  visited   the  farm,  always  ox- 
pressed  perfect  satisfaction  with   the   man- 
angement,    AS  a  matter  of  fact,  tney  did  not 
care  for  any  revenue,  but  were  content  to  see 


rthelr  property  grow  in  value.These  are  merely 

I  typical  cases.    The  truth  is,  if  at  the  present 

\  time  the  natural  Conditions  are  such  as  to 

make  any  branch  of  industry  profitable,  there 

'  are  men    keen   enough   to    see   it,   shrewd 

j  enough  to  bold  their  own  against  competi- 

'  tion  from  abroad,  and  rich  enough  to  await 

its  development  until  it  yields  revenue.    We, 

as  a    nation,  are   rich   and   powerful,  and 

ble«sed  with  natural  opportunities  such  as  no 

other  country  enjoys;  and  however  it  may 

be  elsewhere,  as,  for  example.  In  Jaran,  the 

infant  Industry  theory  Is  an  absurdity  in  the 

year  1883  in  the  United  States. 

Nevertheless,  appetite  grew  with  what  It 
fed  upon,  and  the  call  was  for  increasing 
protection.  How  justify  It?  As  I  said,  pro- 
tectionists began  to  oast  about  for  another 
Bpeclal  plea,  and  they  found  it,  and  from 
about  1840  up  to  the  present  we  have  heard  a 
new  war  cry.namely,  protection  of  American 
labor  against  "the  pauper  labor  of  Europe." 

It  does  not  seem  diflQoult  to  account  for 

this  new  plea,    A  political  labor  party  arose 

about  the  year  1835,  and  soon  acquired   some 

'  influence.  George  Henry  Evans,  whose  name 

,  may  be  remembered  by  some  of  the  readers 

of  The  sun,  was  one  of  its  leaders,  and 

■  among  its  organs  may  be   moniioned  the 

Workingman'a  Advocate,  the  Dally  Sentinel 

and  Young  America,  Its  platform  contained 

twelve  demands,  among  which  were  the  fol-   1 

lowing: 

"The  right  of  man  to  the  soil;  *vote  your- 
self a  farm.' 

"Down  with  the  monopolies,  especially  the 
United  States  Bank. 
"Freedom  of  public  lands. 
"Homesteads  made  inalienable. 
"A  lien  of  the  laborer  upon  his  own  work 
for  his  wasies. 
"Abolition  of  imprisonment  for  debt." 
A  "workingman's  convention"  met  at  Syra- 
cure,  in  New  York  State,  in  1830  and  nomi- 
nated a  candidate  for  Governor,  who  received 
but  a  few  votes.    In  New  York  city,  how- 
ever, they  were  more  successful,  for,  joining 
forces  with  the  whigs,  they  elected  a  few 
members   of  t|ie  Legislature.     These   men 
finally  entered  the  locofoco  party  and  were 
captivated  by  "Old  Hickory."  whose  nomi- 
nation and  election  they  attributed  to  their 
Influence.    The     democratic     party,   under 
Andrew  Jackson's  leadership,  re-echoed  some 
of  the  war  cries  of  the  workingmen's  party, 
and  seemed  finally  to  have  side-tracked  this 
early  labor  movement  and  to  have  brought  It 
safely  into  the  fold  of  democracy. 

Plainly  the    laboring  classes  were  begin- 
ning to  acquire  a  consciousness  of  their  own 
existence  as  a  distinct  class  in   Industrial 
society,  and  wily  politicians  thought  Ii  time 
to  throw  the  worklngman   a^  sop.     Hence, 
about  1840  we  find  the  watch'word  "Protec- 
I  tion  to  American  labor  against  cheap  f  orelcrn 
labor"  taking  the  place  of  the  former  rally- 
'  ing  cry,  "Protection   to  our  Infant  indus- 
'  tries."    No  doubt  for  party  purposes  it  was 
an  immense    Improvement.     It   proceeied 
upon  the  hypothesis  that  the  American  em- 
ployer must  pay  more  than   his    European 
competitor  for  labor,  and  that  difference  must 
be  made  up  to  him  by  a  tax  on  foreign  com- 
petitors; some.  Indeed,  with  a  nice  air  of  accu- 
racy claiming  It  as  a  scientific  principle  that 
duties  should   be   precisely  such   In  every 
instance  as  to  equal  the  differonce^in  cost  of 


labor.  It  is  assumed  that  If  duties  lau, 
American  labor  must  also  fall  in  price,  and, 
like  European  labor,  become  pauper  labor. 
One  manifest  8up?riorlty  in  this  new  plea 
ia  that  it  does  not  advocate  duties 
as  something  temporary,  but  as  some- 
thinff  to  endure  as  lonpr  as  American 
labor  Is  **dear"  and  foreiprn  labor  Is  "cheap." 
Another  is  the  benevolence  wrapped  ud  in  it: 
and  not  merely  benevolence.  It  is  benevo- 
lence of  a  superior  and  unique  sorti  Benevo- 
lence often  means  sacrifice  on  iho  part  of 
him  who  exercises  It,  as  when  I  wear  an  old 
coat  that  I  may  help  educate  the  orphan 
child  of  an  old  friend.  Not  so  the  benevo- 
lence of  the  protective  tariff,  for  it  is  war- 
ranted never  to  take  a  penny  from  ihe 
pockets  of  its  most  devoted  adherents.  They 
may  live  in  palaces,  eat  the  choicest  outs  of 
roast  beef,  drink  champasrne,  and  be  merry 
while  their  bank  aocouuts  swelll  Have  they 
not  done  their  part?  Are  they  not  the  repre- 
sentatives of  protection  to  American  labor? 

But  is  American  labor,  after  all,  protected? 
Let  us  at  once  oro  to  the  Heart  of  thincrs.    If  I 
have  anythinur  to  sell,  it  ia  conceivable  that  I 
I  may  be  helped  in  two  ways  by  government. 
To  say  that  I  wan  t  to  sell  a  thio?  means  simply 
that  I  want  to  Ret  Bomethinjf  else  for  it.    1 
sell  that  I  may  buy.    Money  simply  comes  in 
as  a  medium,  A  farmer  sells  corn  for  money, 
and  with  that  money  buys  shoes.    Corn  is 
really  excbattfired  for  shoes,  and    money  is 
used  as  a  medium  merely  to  facilitate  ex- 
chance.  Now,  if  government  in  some  way  can 
increase  the  suupiy   of   those  things    which 
I  wish  to  buy,  I   may  be   benefited.    More 
will   be     offered   me   for   what  ;i   have    to 
sell.    On  the  other  hand.  If  government  can 
diminish  the  supply  of  the  article  I  want  to 
sell,  I  can  get  more  for  it,  and  I  am  benefited. 
How  stanosthe  case  witn  the  wae"e  receiver? 
What  has  he  to  sell?    The  commodity  labor, 
and  nothlnor  else.     With    that  commodity 
(labor)  he  must  purchase  all  other  things. 
Now  what  is  government  doing  for  him?    Is 
(tovernmeut  rendering  labor  scarce  and  com- 
modities   plentiful?     On  the    contrary,  no 
duty    is   put   on    labor.      Labor    comes    in 
free.    Not  only  thai;  our  protectionists  are 
helping  to  increase  the  supply  of  labor  and  to 
keep  its  price  down.    Do  not  federal  consuls 
encourage  emigration  from  Europe  to  Amer- 
ica?   Do    not    States   and    Territories    send 
agents  abroad  to  aid  and  abet  foreifin  labor 
in  its  purpose  to  fill  up  the  supply  of  labor  in 
our  own  market?    Do   not  the  protectionist 
employers  themselves  keep  iheir  aarents  in 
every  part  of  Europe  to  help  swell  the  throng 
of  those   coming    to    our  shores,  and,  in 
case  of  demand  for  higher  wages,  to    take 
the   place   of     the    discontented?    Strangel 
Yet     it     is     all     truel     Every     word     of 
It,  and" the  orjrans  of  the  protectionists  gloat 
over  the   increasing  supply  of  labor  in  our 
markets.    The  commodity  which  the  laborer  has 
to  sell  is  not  protected.    All  that  government  does 
is  to  help  increase  its  supply  and  thus  reduce  its 
price. 

But  then  it  must  be  that  government  ia 
trying  to  increase  the  supply  of  those  things 
which  workingmen  want  in  exchange  for 
their  commodity,  laborl  God  forbid!  It  is 
taxing  them  and  rendering  them  scarce!  It 
looks  as  if  government  were  working  against 
labor,  doesn't  It?    A  funny  world,  isn't  it? 


THE  BEARINGS  OF  IMMIGRATION. 

Continued  Discussion  of  the  Subject  by 
Prof.  Kicliard  T.  EJy,  of  Jolms  IIupkin« 
Uuiversity. 

I  Written  for  the  Baltimore  Sun.] 

ARTICLB  Xir. 

Our  last  article  showed  that  while  labor  was 
not  protected  by  tariff  laws,  the  commodi- 
ties which  labor  received  in  exchange  for  its 
part  in  production  were  taxed  and  rendered 
dear.    We  saw  that  in  consequence  of   this 
fact  government  had  worked  acainst  labor 
in  two  ways,  for  it  had  on  the  one  band  en- 
couraged the  importation  of  labor  free  from 
all  charge,  and  on  the  other  it  had  discour- 
affed  the  importation  of  those  things  which 
labor  requires  for  the  maintenance   of  life. 
The  reader  should  keep  a  firm  grasp  on  these 
facts  in  all  discussion  on  the  bearings  of   a 
protective   tariff    on  labor.     It  is  easy  to 
see     what     would     have     been     done    by 
sincere     and       intelligent     advocates      of 
governmental    protection    to    home    labor. 
I    do     not    now  raise  the  questioa  as   to 
the  desirabilty  of  such  protection.    I  simply 
propose  to  answer  this  question:  A'^suraing 
that  it  is  the  duty  of  the  federal  government 
to  aid  labor  by  taxes,  how  should  these  taxes 
be    laid?    lit  isj  proposed  to   help  labor   to 
secure  hiarh  wages,  and  it  is  therefore  neces- 
sary to  raise  the  price  it  commands  by  dimin- 
ishing the   supply.     What   can   be   simpler 
than  the  solution  of  the  problem?    Tax  the 
commodity    labor     by    taxing     every  for- 
eigner landing  on  our  shores,  and   encoffr- 
age»  on  the  other  hand,  a  pentlful  Importa- 
tion   of    goods.      This     would   necessarily 
alter  the  relation  between  supply  of  labor 
and   demand  for  labor,  and  supply  of  com- 
modities and    demand    for   commodities  in 
the  interest  of  labor.    Now,  how  high  a  tax 
should    the  siocert^  advocate  of   protection 
f*»vor  on    each  able-bodied   emigrant   from 
foreijrn    lands    upon    his    entrance    into   an 
American  port?    We  must  find  out  the  value 
of  a  woraiiigman,  viewed  simply  as  a  pro- 
ducer—not as  a  husband  or  father  or  citizen, 
but  simply  as  one  who  produces  things  which 
have  vilue  in  the   world's    markets.    Now, 
calculations  of  this  kind   have  actually  been 
maae,  and  f  1,000  may  be  taken  as  a  low  valua- 
tion.   Taxes  on  imported  commodities  are  e4 
high  as  one  hundred  and  fifty  per  cent.,  an<t 
a   tariff    devised    in   the   interest  of   labor 
ought  to  put  the  highest  tax  on  those  who 
supply  the  commodity  labor.    We   may  say 
then  that  a  tax  on  each  foreicrn  able-bodied 
emitrraiitof   $1,500  is  not  excessive  as  com- 
pared with  other  taxes  on  imnorts.    Females 
might  be  taxed  $1,000  and  children  $500.    If 
tbis  would   not  give  a  certain  advantatre  to 
home  labor,  then  two  and  two  do  not  make 
four. 

It  is  to  be  noticed  further  in  this  connec- 
tion that  distanee  in  itsolt  is  not  tne  protec- 
tion to  labor  which  it  once  was,  for  the  trans- 
portation of  emiwrrants  is  so  cheap  now  that 
the  employer  practically  has  a  free  world- 
wide market  iu  wtiich  to  procure  the  com- 
modity labor.  THUS  the  saying  Is  literally 
true,  the  laborer  sells  his  commodity  in  a 
free  market  and  buys  in  a  protected  market. 

It  may  be  well  to  say  a  word  more  about 
restrictions  on  immigration,  for  tbis  is  now  a 
live  question,  and  my  opinion  has  recently 
been  asked.  I  cannot  at  present  favor  re- 
strictions on  immigratlim  of  the  kind  above 
described,  although  they  are  simply  the 
logical  conclusions  from  principles  which,  it 
is  claimed,  we  are  now  trying  to  app  y  in  the 
interest  of  labor,  it  seems  to  me  there  are 
other  and  better  ways  for  advancing  ;tho 
^interesis  of  labor,  foremost  among  wiilch  is  a 


thoiiumi,  B>»irmtviiv    iirtiiiiuif   of  eacb  boy  i 
and  Riri  boru  on  American  soil  for  the  actual 
duties  of  life.    These  duties  are  both  public.) 
atiii  private,  and  prcparatioQ  for  them  must 
Include    training:    duslifned    to    fit   one   to 
become    a  worthy   member    of    a    family, 
a   worthy  oitizen     aud  a    useful    member  ' 
of     industrial     society.      Iq     other   words, 
each   child   oui?bt   to   be   so  train e<l    as   to 
Xo  honorably  its  future  duties  with 
1     .      i,  to  the  family,  the  State,  and,  further-  . 
more,   to  render  au  honest  equivalent  for  ' 
those  economic  (tooda  which  are  needed  to 
support  life  in  decency  and  comfort,  or, 'still 
more  simply  expressed,  to  eret  a  livinsr.    This 
preparation  falls  iu  part  to  the  church,  and 
with  her  functions  we  are  not  now  concerned. 
LarRely,  aud  to  an  iucreasinjf  extent.  It  must 
fall   to   the   school,    because    old-fashioned 
methods,  especially  as  seen  In  the  apprentice- 
ship system,  are  becominer  antiquated.  They 
are  burdensome  alike  to  employer  and  em- 
pl(  ye,  for  the  former  is  often  as  much  op- 
posed    to     them,     and     frequently     more 
opposed       to       them      than      the      latter. 
Probably  General   Francis  A.  Walker,  the 
head  of   the  most  successful  Massachusetts 
Institute  of  TechnoioKry,  is  as  well  qualified 
to  speak  on  this  subject  as  any  man,  and  of 
appreniioeahip  he  savs  this:  *'As  it  exists  to- 
day it  is  an  advantasre  to  neither  party.    The 
apprentice  can  only  learn  a  narrow  specialty, 
so  narrow,  as  a   rule,  that  its  only  value   to 
him  is  the  meacrre pittance  which  he  can  earn 
from  day  to  day,  but  at  the  sacrifice  of   any 
further      educational     advantaeres."       The 
schools,  then,  need    both  extension  and   im- 
provement, and  that  in   several   directions. 
Ono    is     in     respect  to    practical     ethics, 
for     alontf     this     line     our    schools     have 
,  been  lamentably  deficient.    Practical  ethics 
are  required  to  prepare  for  a  worthy  life  in 
the  family  and  in  the  State,    Second,  practi- 
cal traininer  for  the  business  of  lifo  in  the  in- 
dustrial sphere  is  a  necessity.    We  need  in- 
dustrial traininjr  in  cenerai,  as  has  so  often 
been  set  forth  in  The  Sun,  and,  in  particular, 
we  need  more  professional  schools,  usinj?  tnat 
expression  in  its  broadest  sense.  At  one  time 
it  was  thought  by  many  that  special  schools 
were  not  required  for  lawyers,  preachers  and 
physicians,  but  now  the  mistake  of  this  has 
been    demonstrated    by  actual   experience. 
Well,  the  mechanic  needs  special  schools  as 
well   as  the  lawyer  or  preacher.    Our  Klrls 
ousrht  to  learn  how  to  cook  and  sew,  ana  our 
boys  to  handle  tools  aai  keep  accounts  in 
schools. 

Third,  the  present  branches  of  study  should 
bo  better  lauRht,  and  this  requires  a  hiarher 
Krade  of  teacners.  The  profession  of  teacher 
should  be  elevated  iu  rank  and  its  rewards 
increased. 

What  has  this  to  do  with  the  tariff?  Every- 
thing, because  we  are  discussinar  protection 
to  labor,  aud  I  am  pointing  out  in  what  true 
protection  as  distintruished  from  spurious 
protection  consists.  Protection  to  labor  con- 
sists In  renderintr  it  hisrhly  qualified. 

Do  I  need  protection  from  inferiors?  On 
the  contrary,  it  is  the  superior  man  who  may 
drive  me  to  the  wail.  So  if  American  labor 
by  suitable  tralnintf  of  youth  is  rendered 
more  highly  qualified  than  foreitrn  labor,  it 
will  find  itself  belter  protected  than  by  any 
tariff  walls  vvhich  human  Ingenuity  can  in  the 
year  1888  erect  about  the  Uuited  States. 

Labor  may  rightfully  demand  mat  laws 
should  be  passed  to  keep  out  a  low  and  de- 
grade i  c  ass  of  emijjrants,  who  tend  to  lower 
our  civilization  urid  to  throw  upon  us  the 
burden  of  their  support  as  paupers  or  crim- 
inals; and  here  aerain  we  come  to  an  actual 
burden  which  rests  upon  our  entire  Industry 
weltrhing  down  employer  and  employe  alikeV 
Protection  from  the  scum  and  offsouurinff  of 
fciuropeand  Asia  may  ri«rhtfi)lly  be  demanded 
by  all.  Dr.Edward  W.  Derals,aformer8tudent 
of  mine,  has  made  some  recommendations 
Which  seem  to  mo  worthy  of  commendation. 
1!  •  visestBt  the  pissporr  system  be  intro^ 
<j  •iASUfeS'ecJLiv^.jaetlQod   of  oontrollinp 


luimiwruliun,  aua  tuuL  only  those  be  allowed 
to  enter  our  country  who  can  bring  a  pass- 
port duly  signed  by  an  American  consul. 
i\o  passport,  however,  shall  be  granted  to 
those  Hssistcd  to  emigrate  by  any  charity  or- 
ganization or  governmental  agency,  Trans- 
portation to  America  costs  so  liiile 
that  iocal  Europeai  autliorities  find  it 
cheaper  to  unload  tiieir  poor  and  degraded 
upon  us  ih.m  to  keep  them  at  home. 
Already  our  burden  for  public  aims  is  heavy, 
for  it  is  estimated  that  one  lu  a  hundred  re- 
ceives charity  in  the  United  States  even  at 
this  early  period  in  our  history,  and  the  pro- 
portions of  the  burden  will  be  realized  by 
those  who  reflect  that  even  the  great  Ger- 
man army  iuclu'iee  less  than  one  in  a  hun- 
dred of  the  population.  1  would  say  that  the 
passport  ought  not  only  lo  set  forth  mat  tne 
ono  to  whom  it  is  giveu  is  not  aided  in  emi- 
gration by  charity,  hut  that  he  has  not  been 
a  recipieut  of  public  charity  for  the  preced- 
ing twelve  mootus. 

No  passport  should  be  given  to  those  as- 
sisted by  the  agents  of  any  land-grant  rail- 
roads In  the  Uuiitd  States,  or,  in  fact,  by  the 
agents  of  any  corporation. 

Pas-ports  should  be  granted  to  those  over 
sixteeu  only  in  case  they  can  read  and  write. 
Tnese  restrictions  are  the  most  important 
which  occur  to  me.  Any  aitempt  to  limit 
immigratiofi  so  as  to  exclude  those  who  bold 
dangerous  opiniont  is  a  sugtrestion  at  once  so 
absurd  and  impractioaule  tnat  I  hope  no  one 
who  reads  The  bUN  will  require  a  demonstra- 
tion of  its  folly. 

The  poorer  quality  of  a  large  proportion  of 
European  emigrants  is  seen  in  the  sections 
of  country  from  which  they  emigrate.  For- 
merly German  immigrants  came  to  us  from 
the  Khine  and  the  piO!«perou8,  eolightefied 
country  in  the  west  of  Germany.  Now  they 
come  from  the  eastern  parts  and  Polisn 
frontiers,  the  mosc  degraded  part  of  the 
"Fatherland."  Similarly,  it  is  said  that  the 
poorest  parts  of  Irelat^d  are  now  sending  us 
their  surplus  population, and  that  the  Irish 
now  coming  to  America  are  inferior  to  the 
earlier  Irisn  emigrants. 

If  it  IS  salii  mat  this  sort  of  protection  to 
home  industry  is  an  injustice  to  European 
countries,  it  can  bo  repli;  d  that  it  is  not  im- 
probable that  we  shall  be  able  to  do  most 
tor  the  advancement  of  human  civilization  in 
America  if  wo  uo  not  load  ourselves  down 
with  a  to  )  heavy  weight.  America  has  her 
part  to  play  in  tne  world's  history,  and  if  this 
IS  to  be  a  beneficent  pcirt  it  is  essentinl  that 
we  should  amply  protect  our  own  people  and 
allow  our  in&titutions  to  develop  naturally 
from  within,  withiut  violent  a^isaulc  from 
alieu  influences.  O  i  the  other  hand  tnere 
are  many  questions  which  European  govern- 
ments musi  sooner  or  later  settle  for  them- 
selves, aud  I  am  not  sure  mat  we  benefit 
humanity  by  receiving  the  worst  elements 
they  send  us,  anu  thus  enaulinsr  tutm  to  pro- 
long the  exidteuce  of  aucieui  abuses. 


FHOBLEMS  OF   TODAY. 


PKOTECTIONISM     AMD     LABOR. 


AMERICAN  LABOR  NEEDS  NO  SUBSIDY. 

Superior  EAciency  of  American  TVork- 
inemen— Further  Views  by  Prof.  Kicli- 
ard  T.  Ely. 

[Written  for  the  Baltimore  Sun.l 

ARTICLE  XIII. 

1  think  It  was  a  French  jcin?  "who  asked  his 
wise  men  to  explain  why  it  was  that  if  you 
should  put  a  large  fish  into  a  pail  filled  with 
waier,  the  water  would  not  run  over.  This 
puzzled  thera  all  preatly,  until  some  one  sutr- 
gested  that  it  was  not  a  fact  that  the  water 
would  not  run  over.  The  king:,  indeed,  had 
not  stated  that  it  was  a  fact.  I  am  reminded 
of  this  Btory  when  I  hear  some  of  the  current 
discussions  on  the  tarifif. 

It  is  said,  for  example,  that  the  American 
manufacturer  must  receire  hiizrher  prices  be- 
cause labor  costs  him  more  than  it  costs  his 
European  corapatitor,  and  that  these  higrher 
prices  must  be  secured  throutrh  the  action  of 
a  protective  tariff.    But  is  it  a  fact  that  labor 
costs  the  American  manufacturer  more?    I 
doubt  it.    Wasres  may  on  the  whole  be  hijf  her. 
although  even  here,  on  account  ot  unsteady 
employment,  the  difference  is  not  so  jrreat  as 
many  imagine:  but  waijes  and  the  cost  of  labor 
are  two  quite  different  things.    The  cost  of 
labor  depends  upon   two  things— first,  wages 
paid;  second,  the  efficiency  of  labor.    Will  the 
practical  man,  who  pays  $2  a  day  to  his  em- 
ployes engaged  in  some  manufacturing  en- 
terprise in  iMassachusetts,  at  once  remove  his 
business  to  Georgia  if  told  that  employes  can 
in  the  South  be  procured  in  abundance  for 
$150  a  day?    By  no  means.    He  would  be  a 
fool  to  do  it.    He  will  first  ascertain  many 
other  things  about  business,  and  he  will  in- 
stitute a  diligent  inquiry  into  the  relative 
efficiency  of  Northern  and  Southern  labor. 
He  will  say:  *'The  vital  question  with  me  is 
not  how  much  I  pay  a  day,  but  how  much 
will  it  cost  me  to  get  a  given  piece  of  work 
done."    Now  when  we  thus  compare  labor  cost 
in  Europe  and  America  it  appears  that  in  a  large 
portion  of   the  industrial  field   the   American 
jnamifacturer  has  a  decided  advantage  over  his 
fo7'eign  competitor,  for  it  costs  him  less  to  get  a 
giver^iece  of  work  done.    The  American  re- 
ceives higher  wages,  but  does  so  much  more 
work  in  a  day  than  the  European  that  his 
services  are  cheaper  and  more  desirable.    Is 
not  this  plain?    Suppose  I  employ  two  men, 
A  and  B.    A  receives  $3  a  day  and  B  $4  a  day, 
but  B  accomplishes  three  times  as  much  in  a 
day  as  A.    Who  is  the  cheap  laborer?    Here, 
as  so  often  happens,  the  current  saying,  "the 
best  is  the  cheapest,"  holds  true.    An  Amer- 
ican bricklayer  receives  more  per  day  than  a 
Dutch  bricklayer,  but  he  receives  less  per 
brick  laid.    The  same  holds  with  regard  to 
wages     per     day     and     wages     per    piece 
in     certain      grades      of      spinning,      and 
one  who    is    familiar    with  the  details  of 
manufacturing  in  Europe  and  America  can 
give  examples  in  abundance.    Mr.   Schoen- 
hof   has   looked   carefully   into  this  matter 
and  made  a  report  to   the  Department   of 
State,  which  was  noticed   in  The  Sun  in  its 
issue  for  December  31,  1886.    It  appears  that 
hia  the  manufacture  of   silK   In  Sia  English 


miilYthe  average  earnings  of  the  employes 
were  $3  25  a  week,  while  they  were  f  5  50  a 
week  in  an  American  mill  with  which  Mr. 
Schoenhof  was  acquainted.  Nevertheless, 
the  American  operatives  did  so  much  more 
work  that  the  results  were  cheaper  in  our 
country.  A  factory  near  Frankfort-on-the- 
Main  in  Germany  pays  21  cents  per  pair  for 
making  the  uppers  for  ladies'  high  top  button 
gaiters,  while  the  price  paid  labor  for  the 
same  services  in  Lynn,  Mass.,  is  only  11  cents. 
A  pair  of  boots  can  be  manufactured  in  Lynn 
and  laid  in  boxes  for  33  cents,  which  is  far 
below  the  German  cost,  although  the  Ger- 
man laborer  receives  $3  38  per  week,  on  the 
averatre,  and  the  American  $9  00  per  week. 

It  is  not  true,  by  any  means,  in  all  indus- 
tries in  this  country,  that  the  cost  of  labor  is 
less,  but  it  seems  probable  that,  on  the  whole, 
we  are  quite  capable  of  holding  our  own  in 
this  reaped.  As  a  rule,  high-priced  labor  is 
cheap  laoor,  and  labor  for  which  little  is  paid 
is  worth  little.  I  have  often  been  Impressed 
with  this  fact  in  observing  the  effectiveness  of 
servants  in  those  parts  of  the  North  with 
which  I  am  acquaisted  as  compared  with  the 
effectiveness  of  Virginia  servants.  3;  A  house 
servant  may  be  procured  readily  in  the  small 
towns  in  Virginia  for  $5  a  month,  whereas  in 
a  New  York  village  you  would  be  very 
likely  compelled  to  pay  $10  a  month.  Nev- 
ertheless the  Northern  servant  accom- 
plishes about  three  times  as  much,  and 
is  in  reality  the  one  to  furnish  the 
cheap  labor.  A  "social  protective  tariff"  has 
been  more  or  less  discussed  by  political 
economists  in  recent  years.  A  "social  pro- 
tective tariff"  means  simply  a  tariff  designed 
to  compensate  the  manufacturers  for  in- 
creased labor-cost  in  a  country  where  labor- 
ers receive  high  pay  for  few  hours  and  en- 
joy other  exceptional  advantages.  Some- 
thing can  be  said  on  theoretical  grounds  in 
favor  of  this  proposition,  but  the  difficulty  in 
nppiyingjtis  found  to  be  the  fact  that  it  is 
the  laborers  with  long  hours,  low  pay  and 
few  privileges  who  seem  most  to  require 
protection.  England  is  the  country  most 
dreaded  in  international  competition,  but 
nowhere  in  Europe  are  wages  so  high  and  the 
number  of  hours'  woric  per  week  so  small. 
Tho  Enelish  workman  has,  in  some  re- 
spects, at  least  the  advantage  over  the 
American.  He  works  only  flftr-six  hours 
a  week,  and  his  labor  organizations 
are  so  strong  that  they  can  afford  him  better 
protection  than  American  organizations. 
Labor  organizations  in  England  have,  in  fact, 
passed  through  that  stage  of  existence  in 
which  American  organiaations  still  find 
themselves,  and  are  no  longer  obliged  to 
struggle  for  the  right  to  exist.  They  are  ac- 
cepted as  a  settled  fact.  Arbitration  is  more 
successful  in  England  than  with  us,  and  fac- 
tory legislation  is  more  highly  developed. 
*'Pluck-me"  stores  were  prohibited  in  Eng- 
land in  1833,  whereas  a  Pennsylvania  judge— 
and  Pennisylvania  is  a  State  where  the  Amer- 
ican system  of  protection  is  strongest— in  the 
year  of  grace  1887  actually  declared  the  law 
prohibiting  payment  in  kind  unconstitu- 
tional, and  that  on  the  ground  that  American 
workmen  must  be  protected  in  their  freedom 
of  GontractI  rhe  father  of  one  of  my  colleagues 
is  an  English  manufacturer  of  cotton,  whose 
employes,  to  the  number  of  twenty,  I  be-_^ 
Jieve,    came   to  America   to  seek  their  for- 


tunes,  and  they  all,  without  a  sIorIg  excep- 
tion, returned  to  Enariand  convinced  that 
they  fared  better  whore  they  were.  This  is 
not  meant  to  depreciate  the  advantapea  of 
our  country,  for  on  account  of  our  still  un- 
developed resources  there  are  openings  here, 
and  particularly  for  the  Rifted,  which  can  be 
found  nowhoro  In  Europe.  It  does  prove, 
however,  that  our  superiority  for  the  work- 
man is  not  a  clear  case,  and  the  country  we 
most  dread  in  internatioual  competition  is 
tho  one  whore,  with  the  exception  of  our 
(jwn,  wages  are  highest,  and  where  workmen 
aotualJy  toil  fewer  hours  per  week  than  thoy 
do  in  our  own.  Some  of  the  countries  with 
the  lowest  waces  in  the  world;aro  not  at  all 
felt  in  internaiional  competition. 

After  all,  it  seems  a  strangre  thinfr  to  con- 
tend that  a  country  with  superior  advantaKea 
cannot  compete  with  one  with  inferior  natu- 
ral gifts.    It  is  like  claimintr  that  a  man  who 
raises  one  hundred  bushels  of  corn  per  acre 
•will  be  driven  out  of  the  market  by  one  who 
raises  only  fifty.    Yet  this  is  actually  what 
some  claim.    What  is  the  reason  why  wages 
are  hierh  in  tho  United  States?    It  is  simply 
because  nature  has  lavished  hersrifta  as  never 
before  upon  an  intelligent,  enterprisingr  and 
industrious  x)eople.    Labor  and  capital,  when 
jfovernmentdoes  not  force  them  into  unnat- 
ural channels,  yield  a  larger  return  than  in 
Europe.  If  you  invest  a  capital  of,  say,  $1,000, 
and   an   amount  of    labor   equal     to    1,000 
days'  work    In  America,   you    will  receive 
a  greater  product,   more  bushels   of   pota- 
toes or  wheat,  or   pairs   of   shoes,  than  in  a 
country  like  Germany.  There  is  consequently 
more  to  be  divided  amonsr  all  those  who  take 
part  in  production  than  in   the  fatherland, 
and   of  this  greater  plenty  labor  receives  a 
ghara  in  hieher  watres.    There  is   nothing  so 
veils  the  real  nature  of  trads  as  the  use  of 
money  as  a  medium  of  exchange,  and  if  one 
imagines  transactions  to  take  place  without 
the  intervention  of  money,   it  helps  wonder- 
fully to  clear  up  many  things.    A   farmer 
and  two  laborers,  let  us  say,  produce,  with  a 
uriven  investment  of  labor  and  capital,  one 
thousand  bushels  of  potatoes,  whereas  a  Ger- 
man  peasant,  with  his  two  hired   laborers, 
produces  only  six  hundred  bushels.    Mani- 
fesily,  there  is  less  to  divide  between  labor 
and  capital  in  Germany,  and  profit  and  wages 
are  both  small.    Now,  there  are  those  who 
want  to  tell  us  that  men  working  under  supe- 
rior conditions  cannot  hold  their  own  against 
those  working    under    inferior   conditions. 
Is  any  one  disposed  to  dispute  the  fact  that 
our  conditions  are  more  favorable  for  the 
creation  of  wealth?    A  little  travel  and  care- 
ful observation  in  foreign  lands  must  be  suf- 
ficient, I  should   say,  to   convince  any  fair- 
minded  person  that  our  natural  facilities  are 
■uperior.    Barren  hillsides  are  cultivated  in 
Germany  which  would  in  America  be  neg- 
lected.   Why  is  this  so.  If  not  because  the 
American  farmer  can  do  better  than  to  ex- 
pend his  labor  and  capital  on   barren  hill- 
Bides?    Take  railroad  building.     Tho   grand 
opportunities   for   investmenta    in    railroad 
oouatruction  have  in  Europo  already  been 
seized,  and  new  investors  aro  obliged  to  be 
content  with  small  returns  on  insignlQcant 
branch  lirea.    Go  into  an  English  or  German 
town,  ana    you   will    find    capitalists    and 
laborers    eager    for    opportunities     which 
Americans    would     despise.    Why?    Simply 
because  the  grand  opportunities  in  old  coun- 


tries are  very  few.  This  may  be  hooked  at 
from  a  still  different  standpoint.  Will  it  be 
disputed  that  the  total  wealth  created  in  the 
United  States  is  largo  in  proportion  to  our 
capital  and  our  population?  If  not,  then  the 
entire  point  Is  conceded.  The  tariff  laws  cre- 
ate no  new  wealth,  and  our  larger  wealth 
creation  can  only  be  traced  to  our  better 
advantages. 

I  desire«  as  soon  as  possible,  to  tell  the 
readers  of  The  Sun  what  I  think  ought  to  be 
done  at  tho  present  time  with  respect  to  the 
tariff,  but  I  must  beg  them  to  be  patient,  be- 
cause so  much  ground  must  be  cleared  of 
undoubted  fallacies  before  it  is  possible  to 
take  a  rational  view  of  the  protective  tariff, 
and     when    the     word     fallacies     is    used 
reference    Is     had      to     things    which    no 
inan     can    believe      when    ho    once    turns 
them  over  in  his  mind  and  carefully  analyzes 
them.    These  fallacies,  in  fact,  frequently 
amount  to  absurdities,  and  all  the  absurdities 
illy  no  means  proceed  fiojnjthe  protectionists. 
However,  I  desire  now  to  call  attention  to 
the  fact  that  England  and  Germany  could 
not  ruin  all  our  industries,  even  if  their  ad- 
vantages were  In  everything  superior  to  ours. 
Many  will  say  if  foreign  countries  can  pro- 
duce more  than  we  with  a  triven  amount  of 
labor  and  sapitaL,  they  will  drive  us  out  of 
the  world's  market,  and  even  capture  our 
home   markets.    But   how   is   this  possible? 
Will  they  supply  us  with  commodities  and 
take  no  return  for  them?    If  that  were  true, 
the  backward  nations  of   the  world   would 
indeed     have     an     easy    time    of     it,    for 
other     more      highly     developed      nations 
would      supply     them     with     commodities 
for     nothing     on     account    of     their     in- 
feriority.   If,  however,  somethinor  is  taken 
in  return,  then  the  production  of  that  some- 
thing will  furnish   opportunities   for   labor 
and  capital.    Perhaps,  it  will  be  said,  they 
will  take  their  pay  in  money.    If   they  do 
this,  the  precious  metals  begin  to  leave  us, 
prices  will  fall  in  our  country  and  rise  else- 
where, and  it  will  thus  become  profitable  to 
buy  our   commodities,   which    would   Bgain 
turn  the  stream  of  precious  metals  back  to  us- 

The  truth  is  simple.    It  is  relative  advan- 
tatres,  and  not  absolute   advantages,  which 
determine  the  course  of  international  trade- 
If  Englaiid  can  with  ten  days'  labor  produce 
either    one     hundred     bushels     of     wheat 
or    two    hundred    yards    of    woolen    cloth, 
and     with     the    same    labor    we    can    pro- 
duce   seventy-five    bushels     of     wheat    or 
one  hundred  yards  of  woolen  cloth,  England 
will  not  on  account  of  hersuperiority  furnish 
us  with  both  wheat  and  cloth.    She  will  fur- 
nish us  with  that  commodity  in   which   her 
advantage  is  greatest,  and  we  will  send  her 
that  in  which  our  inferiority  is  lea8t;',in  other 
words,  we  will  exchange    our  wheat  for  Eng- 
lish woolen  cloth.  Both  England  and  America 
will  gain   thereby.    Each    will   do    that  for 
which  nature  has  best  fitted  her.    This  is  the 
way  exchanges  naturally  take  place  between 
nations.    One  mar  be  superior  to  others  in 
well  nigh  every  branch  of  production,  but 
each  one  will  seek  to  find  thoso  pursuits  in 
which  it  has  greatest  advantaees.  The  wealth 
of  the  world  will  thereby  be  increased.    Had 
England    accepted    our  offer   of    reciprocal 
free    trade    in    1783,   and    free    trade     had 
always    obtained,     we     would     have      had 
manufactures,    but    it    is     doubtless     true 
that  a    larger    portion   of     our    labor    and 


If  capital  would  ha ,  ^  i^^elT  devoted  to~a2Ticul-' 
'  ture,  and  farmiQfir  would  be  a  more  flourish- 
i  infi:  pursuit,  for  it  i«  in  asrricuiture  that  our 
f  relative  advantages  over  European  countries 
are  most  conspicuous.  While  not  prepared 
to  join  without  qualification  Jefferson's 
laudation  of  asrricultural  pursuits  and  his 
condemnation  of  mauufactures,  1  cannot 
but  think  we  would  fare  quite  as  well  if  our 
chanfire  from  an  agricultural  people  to  a  man- 
ufacturing- people  were  not  proceedinsr  with 
such  a  hot-bed  rapidity,  and  if  our  cities 
grrew  in  size  wifh  a  more  regular  and  less 
feverish  haste.  Has  not,  indeed,  this  unpre- 
cedented increase  in  the  population  of  cities 
been  one  of  the  chief  causes  whioti  have 
made  them  so  corrupt  and  depraved  that 
they  are  regarded  as  a  menace  to  our  civil- 
ization? 


THE  GOVJ^RNMENT  TELEGRAPH. 

Political  Ecoiaoinies  in  the  Civil  Service 
and  the  Federal  Tariff  System  Dis- 
cussed hy  Prof.  Richard  T.Ely,  of  Johns 
Hopkins  Uaiversity. 

[Written  for  the  Baltimore  Sun.l 

ARTICLE  XIV. 

It  was  seriously  proposed  a  few  years  aero 
to  introduce  the  study  of  political  economy 
into  the  public  schools  of  Belifium,  and  there 
can  be  no  doubt  that  in  a  country  ruled  by 
popular  vote  it  is  of  the  first  importance  that 
the  people  should  receive  some  trainioff  In 
early  life  in  the  elements  of   that   science 
which  is   concerned  with    the  fundamental 
conditions   of   national    prosperity.    A  very 
little    knowledse    of    practical    economics 
would  make,  us  a  happier  and  a  still  more 
prosperous  people,  and  it  is  not  necessary  for 
one  believincrthis  to  hold  exajftrerated  notions 
rejfai'dinpr    the    achievements    of    political 
economists.    Political  economy,   if   it   were 
more  generally  understood,  could  not  pre- 
vent  all   strikes   and  lockouts,    but  even  a 
sliprht  knowiedere  of  the  nature  of  industrial 
society      would     do      away      with      many 
of     the     senseless     controversies    between 
labor  and  capital  which  are  so  crreat  a  loss  to 
us  all.    Political  economy  is  not  in  a  position 
to  give  an  absolute  and  unqualified  answer 
to  the  question.  Shall  we  have  a  government 
telegraph  service  in  the  United  States  at  the 
present  time,  or  a  private  service?     Famili- 
arity, however,  with  such  discussions  on  the 
part  of  the  people  would  make  much  that  we 
hear  on  the  subject  Impossible,  and  force  the 
advocates  of   various  measures    to    confine 
themselves  to  valid  arguments,  and  thus  to 
help  us  to  arrive  at  a  rational  decision.     A 
presentation  of  the  claims  of   the  Western 
Union   Teletrraph  at  Washington  last  week 
has  attracted  a  great  deal  of   attention,  and 
yet  this  presentation  Involved  an  error  which 
to  one  who  knows  something  about  the  prin- 
ciples of  the  telegraph  service  is    as  palpa- 
ble    as     the     assertion    that    throe    times 
six  are  nineteen  Is  to  one  who    knows   the 
multiplication  table.    Nowhere  else,  it  was 
maintained,  can  a  message  be  sent  so  far  for 
so  little  money.    But  what  has  distance  to  do 
with  proper  telegraph  charges?    Why  should 
more   be   charged     for   sending   a  message 
a  lon»  distance  than  for  sending  one  a  short 
distance?    Does  any  one  imagine  now  tthat 
,  anything  is  carried?    There  Is  a  slight  diflfer- 
pnce  in  cost  between  messages  sent  for  a  long    | 


distance  and  a  short  distance,  especially  if  it 
is  necessary  to  retelegraph  the  message,  and 
the  greater  length  of  lines  involves  a  small 
additional  investment  of  capital.  Neverthe- 
less, the  difference  is  a  minor  matter, 
and,  with  the  exception  of  Russia  and 
Turkey,  every  country  in  Europe  dis- 
regards it,  and  has  one  charge  for 
all  domestic  telegrams  recrardless  of 
distance.  It  is  like  the  case  of  the  pcstoflQce. 
Rowland  Hill  introduced  his  celebrated  re- 
form, the  penny  postage  system,  by  analyzing 
the  expenditures  for  carrying  letters  and 
presenting  the  results  of  his  investigations 
to  the  public.  It  costs  something  for  the 
postoflBce  to  receive  letters,  cancel  the 
stamps,  sort  them  and  send  them  on  the  way. 
It  costs  something  at  the  other  end  of  the 
route  to  sort  and  deliver  the  letters.  Here 
are  two  elements  of  the  total  cost,  and  the 
third  is  actual  transportation,  and  this  Hill 
showed  was  on  each  letter  so  insignificant 
that  it  could  advantageously  be  neglected 
altogether.  Thus  cost  was  seen  to  be  nearly 
Identical  for  all  letters,  and  the  better  in- 
terests of  all  were  promoted  and  adminis- 
tration simplified  by  one  uniform  charge. 
Similarly,  we  have  one  uniform  charge 
in  most  countries  for  telegrams,  and 
this  is  12  cents  for  12  words  in  England;  in 
Germany,  17  cents  for  10  words;  in  Belgeum, 
9  cents  for  10  words.  Germany's  charge  is 
the  highest,  I  believe,  in  Western  Europe. 
Now,  what  about  long-distence  teleerams? 
No  European  country  outside  of  Russia  has 
any  long  distances  like  ours,  and  when  a  tele- 
gram is  sent  three  or  four  thousand  miles  in 
Europe  it  becomes  an  international  telegram, 
and  charges  on  international  telegrams  are 
based  on  different  principles,  and  are,  very 
properly,  higher  than  for  domestic  telegrams. 
The  receipts  on  international  telegrams  must 
be  divided  between  two,  or  more  countries, 
and  are  higher  on  that  account,  as  well  as  for 
other  reasons,  on  the  same  principle  that  it 
usually  costs  more  to  send  a  parcel  a  given 
distance  when  it  passes  through  the  hands  of 
two  express  companies  than  if  it  is  carried 
the  whole  distance  by  one. 

It  was  further  asserted  that  the  telegraph 
service  was  a  loss  to  England.  It  was  not 
mentioned  that  this  is  due  to  two  simple 
facts:  One  is  that  England  paid  an  exorbi- 
tant price  for  her  telegraph,  and  that  the  in- 
terest on  this  outlay  is  reckoned  among  ex- 
penditures, and  the  other  that  there  had 
been  a  recent  reduction  of  fifty  per  cent,  in 
charges,  and,  like  postoflRce  reductions  in 
charges.  The  first  effect  of  such  a  measure  is 
sure  to  be  a  loss,  although  in  a  few  years  a 
profit  results  therefrom.  Neither  was  it  men- 
tioned that  other  countries  derive  a  profit 
from  their  telegraph  service.  All  these  are  a 
few  simple  elementary  facts,  and  yet,  through 
ignorance  of  these,  a  people  may  be  easily 
deceived.  The  Sun  Tuesday  mentioned  a 
matt«r  in  this  connection  which  is  worthy  of 
serious  consideration,  and  that  is,  the  in- 
creased patronage.  The  Sun  did  not  commit 
itself,  but  simply  called  attention  to  the  mat- 
ter. Other  newspapers  have,  however,  sponen 
of  it  as  an  insuperable  obstacle  in  the  way  of 
a  government  telegraph.  Yet  familiArity  with 
economic  discussions  ought  to  show  one  that 
there  is  another  aspect  to  the  case.  Our  fed- 
eral civil  service  is  bound  to  increase,  and 
there  are  those  among  my  readers  who  will 


,' 


f  lire  to  see  it  double  its  present  dimensions. 
This  is  inevitable,  because  the  expansion  of 
the  country  must  brinarTwlth  it  increased  fed- 
eral business,  unless.  Indeed,  all  government 
business,  army  and  postofflce  included,  is 
handed  over  to  nrivate  corporations!  Now,  it 
strikes  me  that  the  real  damrer  la  this:  that 
our  civil-service  force  will  gradually  and  im- 
oerceptibly  grow  until  we  have  100,000  more 
federal  employes  than  at  present.  That  is  pre- 
cisely similar  to  what  has  happened  before. 
A  danger  which  oreeps  upon  us  unawares  is 
a  serious  one.  Should,  however,|our  federal 
employes  be  increased  by  18,000  at  once,  that 
^TOuld  force  upon  the  attention  of  the  people 
the  principles  of  sound  administration,  and 
the  danger  of  an  abuse  of  political  power  for 
partisan  ends.  The  result  could  hardly  fail 
to  be  most  salutary. 

Although  this  is  a  somewhat  longer  digres- 
sion than  1  intended,  I  do  not  regret  it,  for 

>  there  are  certain  aspects  of  the  tariff  ques- 
tion which  can  be  profitably  treated  in  con- 
nection with  other  problems  of  the  day,  and 
they  will  be  so  treated  in  this  and  some  of  the 
succeeding  articles.  The  whole  topic  of  the 
desirability  of  a  wide  diffusion  of  economic 
knowledge  was  suggested  by  the  receipt  of  a 
protectionist  campaign  document  while  I 
was  writing  my  last  article.  This  was  ad- 
dressed "To  the  Laboring  Men  of  the  United 
States,"  and  is  so  full  of  popular  fallacies 
that  it  requires  a  somewhat  lengthy  treat- 
ment. It  is  one  of  the  things  which  are  only 
possible  because  in  industrial  affairs  people 
have  not  yet  got  so  far  as  the  multipli- 
cation '  table,  and  do  not  know  that  three 
times  six  are  eighteen— not  nineteen.  It  is 
not  the  question  of  free  trade  or  protection, 
but  the  question  of  valid  arguments,  and 
national  action  must  proceed  from  such  argu- 
ments. Again,  it  seems  necessary  to  protest 
that  no  one  contemplates  any  action  which 
will  overthrow  manufactures  that  have 
grown  up  under  a  protective  tariff.  There 
are  reasons  why  that  should  not  be  done,  and 

why  all  the  industrial  interests  of  a  country 
would  suffer  If  that  were  done.  These  will 
be  presented  In  due  time.  Now  wo  are  con- 
cerned with  the  campaigil  document  which 
lies  before  me. 

"The  receipts  of  the  government,"  it  is 
stated,  "are  mors  than  necessary  to  pay  the 
expenses,  consequently  they  must  be  re- 
duced by  the  enactment  of  new  tariff  laws. 
The  democrats  propose  to  lessen  the  receipts 
by  reducing  the  tariff,  and  this  will  flood  the 
country  with  foreign  goods  made  by  the 
pauper  labor  of  Europe,  and  must  necessarily 
take  that  much  labor  from  our  American 
workiugmen.  The  republicans  propose  to 
reduce  receipts  by  abolishing  the  internal 
revenue  tax  laws  and  raising  the  tarifi^on 
foreign  goods  to  such  a  point  as  to  prevent 
them  coming  into  our  country,  and  thereby 
give  to  our  workiugmen  the  right  and  priv- 
ilege of  making  goods  to  supply  our  home 
marKets.  Every  article  brought  Into  this 
country  that  took  ten  days*  labor  to 
make  it  takes  just  ten  days'  labor  from 
our  people;  this  fact  is  too  plain  to  be 
contradicted.  The  free-tradd  capitalist  wants 
tho  tariff  reduced  because  his  money  will 
then  buy  more  of  the  products  of  labor.  In 
other  words,  he  says  to  you:  *I  want  the 
privilege  of  buying  wherever  I  can  buy  the 
cheapest,  and  with  free  trade  you  must  work 


for   the  same  wages  now  paid    the   pauper 
labor  of   Europe,  or  I  will   buy    European 
goods.'    With  a  tariff   that  will  protect  our 
American  iiidustrles  there  will  be  such  a  de- 
mand for  labor  that  legally  organized  labor 
can  demand  of  their  employers  fair  and  just 
wak'Gs;  but  with  a  low  tariff  you  render  it 
impoaaible  for  your  employers  to  pay  you 
good  wages,  because   they  must    sell   their 
products  in   competition  with  the  products 
made  by  tho  low  wages  in  Europe.    In  the 
first  nine  months  of  1887  there  were  about 
1.500,000  tons  of  foreign  iron  brought  to  this 
country.      Now,    if     this     iron     had    been 
mule     here     it    would     havo     given      out 
$33,000,000  of  wages   to  our   own  workmen, 
and  that  would  havo  employed  during  that 
time  80,000  men.    This  is  but  one  article  of 
manufacture,  and  so  it  is  with  a  multitude  of 
other  articles  now  coming  into  this  country, 
but  which   your  votes  can  keep  out.    This 
country  should   make  laws   to  protect  our 
own  workmen,  and  not  the  workmen  of  Eng- 
land and  Europe." 

This  opens  up  a  groat  question,  the  ramifi- 
cations of  which  affect  our  daily  life  in  a 
thousand  ways.  I  moan  the  relation  which 
exists  between  spending  money  and  giving 
employment  to  labor.  This  will  be  consid- 
ered in  our  next  article. 


PROBLEMS  OF   TODAY. 

THE    SEEN    AND   THE   UNSEEN. 


THE    OPPORTUNITIES    FOR    INDUSTRY. 


The  Industrial  Problem  Further  Dis- 
cussed by  Prof.  Richard  T.  ICly,  of  Johns 
Hopkins  University, 

[Written  for  the  Baltimore  Sun.l 

ARTICLE  XV. 

Shallow  as  he   was,  Frederic    Bastiat   un- 
doubtedly said  many  good  things,  and  is  en- 
titled to  ourferatitude  for  having  cleared  up, 
as  no  once  else,  some  of  the  first  nrinciples  of 
economics.    Perhaps    one    of    his    happiest 
efforts  was  his  exposition  of  the  difference 
in  industrial  society  between  that  which  Is 
seen  and  that  which  is  not  seen.    A  worthy 
shopkeeper,  Jacques  Bonhomme,  is  enraged 
because    his   careless  son  breaks  a  pane  of 
glass,  while  the  spectators  who  gather  about 
the  scene  offer  the  father  this  consolation: 
"It  is  an  ill  wind  that  blows  nobody  good. 
Everybody  must  live,  and  what  would  be- 
come of  the  glaziers  if  panes  of  glass  were 
never  broken."  vv  ho  among  myreaders  has  not 
heard  similar  expressions  of  opinion?  And  how 
many  of  them  are  there  who  do  not  feel  that 
there  is  a  certain  justice  in  the  view  of  tho 
indifferent'  but  good-natured  rsoectators?    I 
remember  a  report  which  reached  me  three 
years  aero  that  u  warehouse  in  Baltimore  was 
destroyed  by  flre.    I  was  in  a  small  company 
at  tho  time,  and  a  young  woman,  of  at  leest 
average  intelligence,  made  the  remark,  *'It  is 
time  the  old  building  did  burn  down  and  give 
workincrmen  a  chance  to  get  employment-  It 
has   been  standing    the    last    fifty    years." 
Some  time  previously  a  good  friend  of  mine, 
a  lady  of  considerable  means  and  a  devout 
member  of  one  of  our  leading  churches,  told 
mo  that  she  considered    it  the  duty  of  the 
wealthy  to  spend  money  on  dress  in  order  to 
glvo  employment  to  labor.    A  clergyman—  J 
whom  I  esteem— was   recently  reported    in 


ball  on  religious  grounds,  but  admirtinp:  that 
after  all  It  was  a  i?ood  thinfr  for  dressmakers 
and  other  employes  who  were  ent^aped  on 
the  elaborate  toilets,  as  well  as  for  the  mer- 
chants, who  sold  thousauds.of  dollars'  worth 
of  poods. 

At  the  close  of  my  last  article  I  made  a 
quotation  from  a  hi^h-tariff  campaicrn  docu- 
ment to  tne  efTect  that  1,500.000  tons  of  iron 
brought  to  this  country  from  Europe  oueht 
to  have  been  produced  at  home,  as  la  that 
case  $33,000,000  would  havo  been  spsnt  for 
wases  in  our  country  and  80,000  men  would 
have  received  employment  for  nine  months. 
Let  us  examine  these  various  opinions  with 
some  care,  for  they  are  all  closely  related. 
Certain  phenomena  are  seen  injeach  instaoce. 
The  glazier  receives  six  francs  for  putting 
in  a  new  pane  of  glass,  and  he  is 
happy  because  he  has  an  opportunity  to  earn 
some  money.  The  warehouse  burns  down 
and  bricklayers,  carpenters  and  masons  are 
employed  for  several  months  in  putting  up  a 
new  buildiuff.  The  wealthy  iady  spends  !5200 
for  asiritrle  dress,  and  the  merchant  who  sells 
the  material  and  the  dressmaker  are  both 
pleased,  precisely  as  those  are  delisrhted  who 
minister  to  the  wants  of  the  belles  at  the 
Charity  Ball.  The  hi)?h-tariff  people  shut  out 
foreign  products  and  point  to  our  busy 
workmen  eneraered  in  manufacturinpr  those 
thing's  which,  but  for  the  tariff,  would  be  im- 
ported.  All  these  things  are  seen  and  ob- 
served of  all  men.  but  there  are  other  phe- 
nomena of  equal  importance  which  pass 
unnoticed.  Jacques  Bonhomme,  the  shop- 
keener,  was  just  on  the  point  of  orderingr  a 
new  pair  of  shoes  for  his  wife,  for  which 
he  expected  to  pay  six  franca.  These 
shoes  be  is  now  unable  to  order  on  account 
of  his  loss,  and  the  shoemaker  misses  his  op- 
portunity to  earn  six  francs.  This  is  that 
which  is  not  seen,  but  it  is  beyond  all  contro- 
versy that  no  additional  employment  has 
been  Briven  to  labor  because  the  Ciireless  son 
broke  the  pane  of  glass.  The  shopkeeper's 
wife  is,  however,  put  to  the  shame  and  morti- 
fication of  wearinc:  old  and  patched  shoes; 
and  from  all  this  we  see  that  society  is  poorer 
OQ  account  of  the  broken  pane  of  glass. 
There  is  a  smaller  quantity  of  commodities 
to  be  enjoyed  by  the  various  members  of  the 
community  than  there  would  be  otherwise, 
and  suffering  ensues.  So  it  will  likewise  be 
discovered  that  loss  and  waste  in  the  other 
cases  are  simply  loss  and  waste,  and  no 
amount  of  sophistry  can  ma&e  them  any- 
thing else. 

We  see  the  men  putting  up  a  new  building 
on  the  site  of  the  old,  but  that  which  is   not 
seen  is  a  decreased  expenditure  somewhere 
else,  and  yet  there  is  scarcely  a  doubt  about 
this.    Possibly  the  insurance  company  which 
sustains  the  loss  decides  on  that  account  not 
to  construct  a  new  building  for  its  own  use 
as  it  had  intended,  and  thereby  the  demand 
for  labor  is  diminished.    It  is  more  probable 
i  that  it  is  obliged  to  refuse  a  loan  which  some 
{builder  desired  for  the  purnose  of   carrying 
forward   improvements.     Or,   the  company 
may  be  obliged  to  lower  dividends,  and   on 
account  of   diminished   means   people   buy 
fewer     bats,  shoes,    coats   and  oiher  things 
which   they   need      My    good  friend    who 
spends   8200  on    a   single  dress    sees    em- 
ployment    given.       She     does     not     per- 
_ceive     tpat,    if     she     had     given ._  twenty 


xea!i' 


quite  as  much  work  would  have  been  (riven 
to  sewing  women.  Extravagance  nnds  no 
justification  whatever  on  the  plea  that  it 
gives  employment  to  labor.  A  possession  of 
money  sunply  means  that  a  person  has  con- 
trol over  a  certain  amount  of  labor  and  can- 
ital,  which  may  be  directed  in  any  channel 
one  pleases.  I  may  so  use  my  money  that 
labor  and  capital  shall  minister  to  my  wants 
and  to  my  pleasure,  or  so  that  labor  and  cap- 
ital shall  minister  to  the  wants  and  pleasures 
of  others.  When  I  do  the  one  I  show  that  I 
love  myself;    when  I  do  the  other  I  show 

*^nnJ;n^°^®  ^^  neighbor.    One  man  snends 
$200,000  on  a  private  house;  another  S300  000 
on  a  public  library  building.    Labor  is  em- 
ployed  in   either   case,   but   in   the  one  an 
individual  derives  a  selfish  advantae-e  there- 
from, and  in  the  other  the  advantage  is  gen- 
erously conferred  on  the  public.    1  know  a 
school   in   which    poor   ignorant  people  are 
trained  to  useful  occupations   at   the  same 
time  that  the  mind  is  instructed.  The  sum  of 
$1,500  endows  a  permanent  scholarship  and 
keeps  one   person   here   for  all  time.    That 
$1,500  furnishes  directly  as  much  labor  as  the 
same  money  spent  in  a  feast,  and  indirectly 
it  furnishes  a  thousand  times  as  many  oppor- 
tunities for  employment,  because  craduates 
go   forth   from  this  school    skilled,    intelli- 
gent   and    honest    laborers,     increase    the 
wealth  of  the  country  and  holn  to  orsranize 
industry  on   a   solid   basis.     I  have  known 
$1,500    to     send    one    hundred    boys   from 
the    slums     of     New     York     city    to    the 
West,      where     most     of     them— not     all 
of  them.but  the  great  majority— b?came  hon- 
est, respRctable,  hard-working,  citizens,  who 
all  their  lives  long  furnish  opoortunities  for 
labor   in    the  commodities  which  they  pur- 
chase.    When  the  boys  were  taken  West  the 
»1,5U0  gave  employment  to  labor  on  railroads 
and    hotel's    and     boardins-houses,    just   as 
much  employment  as  the  same  monevst)eut 
on  charity  ball  costumes  would  have*  given 
and  thereafter  it  furnishes  a  thou -lani  times 
as  much  employment.  The  faithful,  c-mscien- 
tious  person,  who  will  take  the  trouble,  finds 
enriiess  opportunities   to  spend  m-in'^'y-oas 
to  help  others,  to  lift  them  un  and  prepare 
them    for   useful   careers,  and    needs    n«'ver 
spend  money  on  self  to  give  emplovment  to 
labor.    My  friend  mny  he  risht  in  spending 
»300  on  a  dress.    She  must  answer  for  that  to 
her  own  conscience;  but  she  spands  it,  if  she 
understands   the  consequf^nces   of   her  own 
acts,  simply  because   she  wants  a  beautiful 
dress,  and  considers  it  in  this  instance  justi- 
fiable 10  prefer  her  own  happiness  to  that  of 
others. 

No. V  let  us   return  to  the  tariff.    We  see 
1,500,000  tons  of  iron  enter  the  country    Tnat 
is  seen.    We   fail   to  notice  that  in  payment 
for  this  thirty  million  bushels  of  wheat  leave 
the    country,  and    that   the   farmers   find  a 
market  for  their  produce  which  would  other- 
wise be  closed.    Our   business    men  are  talk- 
iue-  about   foreiirn    markets,  but  is  any  one 
insane  erjough  to  think  that  we   can    sell    to 
foreicrners  unless  we  import  from  them?  And 
what  would  be  the  object  in    such    procoed- 
inars— in      always      sending      goods      away 
from    the    country    and     never     receiving 
any?     The      thing     which      is      not      seen 
is  that  If  we  stop  iraporiinir  we  must  stop  ex- 
Doriing,  and  that  if  we   stop  exporting  ""-- 
deorive  our  own  home  labor  of  employ tn 
and  transfer  employment  which    Amer 
la'or  might   have  to    the    socalled  na; 
labor  of  Europe.    Ought  it    to  be  necessary 
to  dwell  on  this  in  Baltimore?    Would  wo  not 
have  a  flourishinsr  trade  with  South  America 
In  our  own  city  did  not    th'  tnri<?    r-.',,ir.-  it 


i 


f 


V 


.'     All  ,.  ut;   ttiftt  li' cause  w.:»  cari- 

"  'C    inn  It  from    South  America  we 

cannot  export  them?  For  how  canshipplnfj 
thrive  u:ile8s  it  has  cargofs  both  ways?  And 
a-*  we  cannot  export  to  South  AnierlCB.  are 
wp  not  depriviuic  Americau  labor  of  employ- 
ment? 

Is  mere  any  ono  who  would  like  to  see  us 
ahs^THin  from  all  dealink's  wi:  h  iorei*rn  c<mn- 
trlos?    If  It  is  R-ood   for  us  to  krt-p  all    our 
money  at  home,  why  is   it  not  sroo'i  for  one 
einple  State  to  abaiain  from  all  dealings  with 
otherStates?    And  if  jfood  for  a  Srp.te,  why 
not  for  a  city?    Let   us   build  a  hiu-h   wail 
about    Baltimore,  and  shoot  the  man  dead 
who  comes  In  or  crocs  out.    That  would   keep 
our  money   at   home.     But  whv  should  not 
each  famiir  be  sufficient  unto  i.self,  and  ke^p 
all  its  money   at  home?    I  am   a  practical 
farmer.  Is  it  not  foolish  for  me  to  send  money 
avTay  from  home  for  butter,  etrars,  poiatofi?, 
chickens,  haras  and  '"he   like?    I  could  raise 
them  if  I  desired.    Why  not  do  this?     Be- 
cause luy  time  is  worth  more  for  other  pur- 
poses.   Ir  is  only  in  a  state  of  complete  bar- 
barism   that  each  person  is  sufficient  unto 
himself  and  avoids  exchanges  with  his  neigh- 
bors.   JNow   If   it  is  prcifltable    for  an  indi- 
vidual to   find  out  those   tbines  for  which 
nature    has   adapted    him,    why    is     it    not 
ailvantaireous     for    the    people    of    a    city 
or      Slate      or     a      nation      to      find      out 
those   things   in    the   production   of   which 
the  Aimijfhty  has  given  tnem  facilities,  and  to 
exchaukre  surplus  products  with  the  surplus 
Df. -ducts  of  other  cities.  States  and  nations? 
Surely  it  is  thus  that  the  most  abundant  op- 
portunities   will   be  offered  to  labor  to  find 
employment;  not  merely  that,  but  tne  lare-cst 
possible  returns  for  its  services  will  thus  be 
scoured. 


THRIFT  AN1>  liXTKAVAGANCE. 

Importance  of  General  Information  on 
Practical  Afiairs  Discussed  by  Prof. 
Kichard  T.  Ely,  of  Johns  Hopkins 
University. 

[Written  for  the  Baltimore  Sun.l 

ARTICLE  XVI. 

"A  faulty  political  economy   is  the  fruitful 
parent  of  ciime."    This  is  one  of  the  wisest 
of    I  he   many  wise  sayings  of   Dr.  Thomas 
Arnold.    Everybody  acts  upon  some  theory 
of  political  economy,  for  it  is  impossible  for 
■I  rational  man  to  olay  his  part  in  industrial 
society  without  having  some  reason   for  his 
actions.    A  man    who  acts  without    reason 
for  his  actions  we  call  either  an  insane  man 
or  a  fool.    But  as  soon  as  a  man  puts  his 
^^eaaon  for  an  indusjtrial  action  into  words  he 
explains  the  economic  theory  which  under- 
lies  the   action.     Everybody    must   in    the 
nature  of  thing-s  be  more  or  less  of  a  politi- 
cal  economist,  and    consequently   more    or 
less  of  a  theorist,  for  to  act  without  theory 
and    without   reason   are  one  and  the  same 
thlncr.     Of   course,  the   reason  priven  for  an 
action     may     be     valid     or     it     may    in- 
voive     all    sorts    of    fallacies;    equally,    of 
course,  the  theory  of   industrial   action    in 
a   ptven    concrete   case   put   forward    by   a 
business  man  may  or  may  not  be  sound,  but 
the  moment  he  beu-ins  an  arjfument  he  be- 
comes a  theorist.    Economic   theory  treats 
simply  of  the  principles  which  irovern  action, 
and    In  its  last  analysi.^  is  based  upon  ex- 
perience. An  esteemed  contemporary  of  The 
Sun,  published  within  a  thousand  miles  of 
the  City  Hall,  has  of  late  bad  much  to  say 
about  free- trade  theorists  and  professors  of 
political  economy,  who   are    teaching   their 
classes  free-trade  doctrines.      I  propose   to 
make  no  special  comment  on  these  various 
squibs,  which  are  both  amusinsr  and  enter- 
talningr,  but  it  may  bo  well  to  say  a  word 


'|»abouc  the  claims  of  poiuicai  economists  m 
general,  and  about  the  basis  on  which 
they^  rest,  few  these  are  involved  sooner 
or  later  in  all  economic  discussions. 
Political  economy  is  concerned  with 
the  facts  of  industrial  life  which  it 
attempts  to  arraog-e.  classify  and  explain. 
This  involves  a  treatment  of  past  industrial 
life,  the  forces  which  have  been  at  work  and 
which  have  made  it  what  it  is  today,  finally, 
an  examination  of  those  forces  now  at  work 
and  which  are  shapinpr  the  future.  But  why. 
It  can  be  asked,  should  political  economists 
presume  to  instruct  business  men  about  the 
facts  of  Industrial  life  when  business  men 
are  all  the  time  eueaaed  in  industrial  life  and 
make  it  what  it  is?  Let  us  see.  You  con- 
verse with  a  business  maa  in  Pittsburir,  Penn- 
sylvania, about  those  aspects  of  business 
which  concern  the  public,  and  he  will  very 
likely  crive  you  a  theory  which  he  will  claim 
is  impretrnable  because  it  is  based  on 
facts  with  which  ne  is  thorou;?hly 
familiar.  No  political  economist  can  con- 
vince him,  he  will  tell  you,  that 
his  theory  is  not  sound,  for  ho  knows  that  it 
is.  Very  well.  Now,  pro  to  New  York  and 
converse  with  a  busincs?  man,  and  he  may 
dogmatically  lay  down  exactly  the  opposite 
theory,  of  which  he  Is  quite  as  positive,  be- 
cause, as  he  says,  bo  knows  the  facts.  This 
may  suergest  an  explanation  of  the  functions 
of  the  political  economist,  and  when  even  in 
the  same  city  you  find  business  men  of  differ- 
ent occupations  holdinj?  the  most  contradic- 
tory opinions,  it  becomes  evident  that  it 
would  be  desirable  to  have  a  class  of  men 
with  a  largrer  acquaintance  with  facts  to 
stand  between  these  jarrine:  factions.  This 
is  precisely  what  political  economists  attempt 
to  do.  A  thouprhtful  business  man  must 
often  feel  that  he  is  in  the  position  of  a  man 
in  a  dense  forest,  who,  as  the  proverb 
has  it,  can  only  see  the  individual 
trees  and  not  the  forest  at-  all.  A  political 
economist  is  rather  in  the  position  of  a  man 
on  an  elevation  who'  overlooks  the  entire 
forest  and  erets  a  better  general  view  than 
one  in  the  midst  of  it,  and  can  better  tell  him 
how  to  escape  from  the  forest.  But  this  also 
suffgests  something"  else.  Tlie  more  minute 
and  detailed  knowledge  of  the  man  in  the 
forest  itself  ia  of  Importance.  Should  he, 
without  reflection,  follow  the  directions  of 
the  man  on  the  hilltop  he  might  find  himself 
hopelessly  stuck  in  a  quasrmire  which  could 
not  be  seen  from  a  distance.  Both  the  gen- 
eral and  the  special  knowledsre  are  required, 
and  political  economists  who  fall  to  accord 
due  respect  to  the  special  informa- 
tion of  the  man  of  affairs  fall  into 
most  grievous  error.  Mayor  Latrobe 
acted  with  a  full  appreciation  of  this 
fact,  as  it  seems  to  me,  when  during  his  last 
term  he  selected  the  members  of  the  recent 
city  tax  commission,  for  he  chose  a  repro- 
senlative  of  business,  a  representative  of  the 
law  and  a  representative  of  the  science  which 
deals  with  taxation.  Industrial  society, 
or.  If  a  more  popular  term  Is  desired,  the 
business  world,  is  a  thing  which  grows  like  a 
piant  or  an  animal,  and  careful  observation, 
coupled  with  accurate  inductive  and  deduct- 
ive reasoning,  enables  us  to  discover  tho  laws 
of  its  growth.  Its  health  and  its  disease.    No 

'  organism  Is,  however,  more   complex,    and 
political  economy  is  still   in  its  infancy,  and 

j  while  worthy  of  attention,  its  teachings  must 


undoubtodly  be  accepted  with  more  or  less 
caution.  Political  economists,  it  is  true, 
differ  in  important  particulars,  but 
I  suppose  these  differences  are  ^ot 
more  radical  than  those  oC  physicians, 
or  in  fact  than  those  of  many  ^ber  scientific 
men,  while  it  may  be  said  that  Jhose  respects 
in  which  there  is  substantial  harmony  amonsr 
them  are  still  more  important  th&n.  their  dif- 
ferences. Now,  when,  as  is  the  case  in  the 
general  view  taken  of  commerce,  there  is 
soraethins:  approaching  substantial^nanimity 
amoncr  economists.  It  is  not  unreasonable  to 
claim  that  this  view  deserves  at  least  as 
much  attention  as  it  receives.  When  a  polit- 
ical economist  seta  forth  his  opinions  it 
should  be  remembered  that  these  are  not 
merely  his  individual  opinions,  but  opinions 
formed  in  the  liffht  of  a  science,  which,  if  it 
is  still  in  its  infancy,  has  nevertheless  been 
pursued  for  one  hundred  years,  and  has  re- 
ceived contributions  from  some  of  the  bright- 
est minds  of  modern  times.  Nor,  when  it  is 
considered  that  the  science  which  deals  with 
human  beings,  livlntr  In  society  and  consti- 
tutinff  a  livintr  ortranism,  is  the  most  com- 
plex and  difficult  of  all  sciences,  can  it  be 
claimed  that  its  progress  has  not  on  the 
whole  been  encouraging,  while  It  is  probable 
that  this  progress  is  at  the  present  time  more 
rapid  and  more  hopeful  than  it  has  ever  been 
before.  It  is  further  noteworthy  that  politi- 
cal economists  have  not  been  "mere  theo- 
rists," if  by  that  is  meant  men  who  have  had 
no  practical  experience  outside  of  their  own 
specialty.  I  have,  on  the  contrary,  been 
struck  by  the  fact,  in  reading  the  bioirraphies 
of  political  economists,  that  they  were  as  a 
rule  good  business  men,  some  of  them  win- 
ning great  distinction  in  pursuits  which  are 
ordinarily  called  "practical."  There  is  Ri- 
cardo,  for  example,  who  on  the  English  stock 
exchan£«  outstripped  all  his  competitorij 
and  won  so  laree  a  fortune  at  an  early  age 
that  he  was  able  thereafter  to  devote  himself 
exclusively  to  intellectual  pursuits.  Few 
men  have  done  more  for  economic  science, 
though,  stranjre  as  it  may  seem,  this  practical 
business  man  was  the  most  purely  abstract 
and  theoretical— usine  that  word  in  an  ordi- 
nary sense— of  all  political  economists,  and 
did  barm  in  leading  political  economists 
away  from  a  careful  observation  of  actual 
experience.  Then  in  England  we  may  also 
mention  Henry  Fawcett,  professor  of  polit- 
ical economy  in  the  University  of  Cambridge, 
probably  the  best  postmaster-general  Bnar- 
land  ever  had.  Kobert  Owen,  ex- 
tremist and  radical  though  he  was, 
made,  it  seems  to  me,  some  impor- 
tant contributions  to  economic  science, 
and  he  was  for  a  long  time  regarded  as  the 
most  successful  cotton  Jmanufacturer  in 
Great  Britain.  He  was  often  spoken  of  as  a 
"cotton  prince,"  just  as  we  eall  certain  n)en 
railway  kincrs.  One  of  the  most  excellent 
works  on  banking  was  written  by  J.  W.  Gil- 
bart,  formerly  director  and  general  manager 
of  the  London  and  Westminster  Banic,  and 
of  the  great  banking  houses  of  London. 
"Lombard  Street,  a  Description  of  the  Money 
Market,"  is  one  of  the  standard  works  in 
economic  literature,  and  it  was  written  by 
"Walter  Bagehot,  a  practical  financier,  as  was 
"The  Theory  of  Foreitrn  Exchanges,"  the 
author  of  which  is  the  Rlarht  Hon.  George  J. 
Goschen.  When  we  turn  to  Germany  we 
can    find  scarcely  one  economist  of  note. 


}  I    think,    who    has    i!  en  some   prao- 

t  tical  part  in  the  gnvertmuut  of  his  country, 
or  of  some  of  its  local  political  units,  and  that, 
go   far  as   I   have  learned,  with  uniformly 
beneficial    results.    Political    economy    has 
until  verr  recently  been  in  a  backward  posi- 
tion in  our  own  country,  but  it  is  now  rap- 
idly takin?  a  better  position  as  a  practical 
science.    One  of  the  American  contributions 
to   economic   science   is  the   work,  "United 
States  Notes,"    by    Hon.  John   Jay    Knox, 
whose  reports  as  comptroller  of  the  currency 
are   among  the  best  tbini'S  writren  on  our 
bankinir  system.    As  oresident  of  "The  Bank 
of  the  Republic,"  in  New  York,  it  will  be  ad- 
mitted that  Mr.  Knox  is  now  doine  the  worK 
of  a  "oractical"  man.    Our  national  banking 
system  itself,  one  of  the  best  which  the  world 
has  ever  seen,  is  to  no  inconsiderable  extent 
due  to  Dr.  McVickar,  formerly  professor  of 
political  economy  in  Columbia  College.   Gen. 
Francis  A.  Walker  is  today  one  of  the  most 
distioeruisned  political  economists,  and  as  he 
has,  in  addition  to  other  service**,  brousrht 
th('  Massachusetts  Institute   of  Technology 
into  the  front  rank  of  such  institutions,  he 
ought  to  receive  the  respect   of    the    com- 
munity as  a  practical  man,  for  I  will  venture 
to  say  that  to  rnanaire  successfully  a  trreat 
institution  of  learning  requires  as  profound 
a  knowledge  of  men  and  affairs  as  it  does  to 
build  up  a  creat  commercial  or  manufnctiir- 
ine  es'Hhl'Shment.  Dr.  .Tame-,  of  the  Univi^r- 
8ity  of  Pennsylvania,  has  written  the  best 
treati'je  in  tue  Eiikrl;sh  lan^uasrt^  on  "The  Re- 
lation   of   the    Modern    Municipality   to  the 
Gas   Supply,"  and  by  his  opposition  to  the 
sale  of  the  municipal  gas  works  of  Philadel- 
phia has  saved  that  city  millions  of  dollars, 
which  strikes  me  as  an  extremely  practical 
thii)»r  to   do.    The   best   treatise    on    public 
debts   in   any    language  is  the  work  of  Dr. 
H'^nry  C.  Adams,  pri  fessor  of  political  econ- 
omy in  the  University  of  Michican,  and  to 
write   an  exct  llent  work  on  so  practical  a 
topic  is  certainly  practical. 

The  truth  of  the  matter  ls,political  economy 
is  a  body  of  knowledge  as  yet  hicomplete  and 
imperfect,  still  of  vm^t  importance,  which  has 
been  built  up  by  the  labors  of  those  on  the 
one  hand  who  were  primarily  business  men 
and  secondarily  political  economists,  and  on 
the  oiher  hand  by  those  wno  were  primarily 
political  ec  'nomisis  and  secondarily  Ousine^s 
men.  While  it  may  be  true  that- political 
economists  have  often  failed  to  give  due 
weight  to  the  special  detailed  knotvledtre  of 
those  who  are  exclusively  men  of  affairs,  it  is 
equally  true  that  we  have  suffered  serious 
loss— a  loss  amountiiie  to  hundreds  of  mil- 
lions—because business  men  have  so  often 
failed  to  master  general  economic  principles. 
Business  needs  political  economy,  and  polit- 
ical ecoeomy  should  dilijrentiy  appropriato 
the  teachings  of  business. 

Dr.  Arnold  said— to  rt- cum  to  my  text— "A 
faulty  political  economy  is  the  fruitful  par- 
ent of  crime."  More  might  have  been  added, 
f</r  it  is  not  only  the  fruitful  parent  of  crime; 
it  is  the  most  fruitful  parent  of  foily  and 
consequent  misery.  The  last  article  in  this 
series  dwelt  upon  the  importance  of  phe- 
nomena not  readily  s^^en.  It  seems  that  a 
few  points  are  not  yet  clear.  It  is  said  "it  is 
after  all  batter  to  spend  one's  money  in  ex- 
travagance than  to  hoard  it  up."  Money 
"iioarded  up"  and  "locked  up"  is  something 
about  which  we  hear  every  day.  What  is 
meant  by  these  expressions?  Who  hoards  up 
money?  No  one  in  these  days— at  any  rate 
very  tew.  Money  is  put  in  banks.  Does  any 
one  of  my  read'.rs  imasrine  it  stays 
there?  By  no  means.  It  is  used  in 
business  and  i!?ives  employment  to  labor. 
Take  our  savings  huiiks.  In  one  of 
them  there  are  denosits  of:>over  sixteen  mil- 
lions of  dollars.  la  this  monoy  hoarded  up? 
Bv  no  means;  it  is  all  used.    Tou  Fee  money 


^ 


employed  In  building  In  Baltimore,  and  you 
say  it  is  a  srood  thinjf,  for  it  makes  business 
and  drives  employment  to  labor.  Where  did 
that  money  corau  from?  If  any  r*  '  f 
this  ariiele  will  tallcxTith    practical  i 

and  practical  bank-^rs,  I  think  he  will  soon 
be  convinced  that  that  is  precisely  the  money 
which  is  in  popular  parlance  hoarded  up  or 
locked  up. 

One  of  the  first  thinc«i  which  oueht  to  be 
tauyht  In  schools  is  that  what  is  saved  is 
spent.  To  srtve  money  does  not  mean  to 
■-  It  simply  means  to  spend  money 
\vay  that  soraethincr  is  left  to  show 
for  it.  Take  two  mechanics,  each  receivlncr 
hiffh  wajres.  say  f4  a  day.  Ono  spends  his 
money  in  having-  '"a  srood  time."  People  like 
him;  they  smile  upon  him— while  his  money 
lasts,  but  no  Jofj^er— and  eay  ho  "keeps 
!  in  circ-ulation."    The  other  mechanic 

iUl,  Pelf-tienyiner,  fruural.  "He  hoards 
hi^  money."  but  he  builds  him  a  home.  So  it 
is  set'u  when  one  groi  s  below  the  surface  of 
thmes  that  the  money  saved  has  after  all 
been  spent,  and  just  as  much  employment 
has  been  piven  to  labor.  At  the  end  of  ten 
jeHTs  your  "trood  fellow"  is  verylik<dyim- 
roverisNud  and  broken  down,  and  the  thrifty 
mechanic  has  shown  himself  after  all  the 
better  roan,  the  better  father,  the  better  cit- 
izen. 

I  know  of  nothiuK-  rcoro  pernicious  in  its 
consequences  than  these  shallow  judtanents 
which  we  hear  about  spendiiiflr  money  and 
•keepine  it  in  circulation."    It  is  the  faulty 
political    economy   which   makes    the    man 
more    popular   who    spends    ten    thousand 
dollar?  on  a   feast   than  his   neicrhbor   who 
"saves"  ten  thousand  and  builds  six  homes 
for    workiugfmen'a    families.     It    was     this 
faulty  piditical  economy  which  made  the  third 
Napoleon,  the  curse  of  his  country  and  of  his 
treneratioG,  so  popular  in  his  excravaarance, 
while  the  frugal  court  of  the  Prussian  mon- 
arch was  settinjf  his   pecjple  an  example  of 
industry  and  thrift  which  are  now  makinc 
them  both  wealthy  and  mie:bty,  dreaded  by 
Entrland  In  the  mdusirial  field  as  much  as  by 
France   in    the   military  Held.    It  was  this 
fHulty  political  economy  which  led  the  same 
esteemed    contemporary  to    which   I    have 
already  referred  to  suargest  that  a  crreat   and 
prinditie:  monopoly  was  not  so  bad  a  thing 
after  all,  because  its   head  men  spent  their 
moncv  "ruvally." 


nsszaer 


PROBLEMS  OF  TODAY. 

THE   DANGER   OF  MONOPOLIES. 


IN    FELLOWSHIP    WITH     SOOULISTS. 


The  "Trust"  Unoousciously  a  Kevolution- 
ary  Sentient,  as  Shown  by  Prof.  Rich- 
ard T.  Ely,  of  Johns  Uupkius  University. 

LWrittun  for  the  Baltimore  Sun.] 

ARTICLE    XTII. 

I  have  dwelt  upon  the  importance  of  polit- 
ical economy,  and  have  endeavored  to  show 
that  political  economists  are  practical  men. 
I  may  add  that  political  •conomy,  as  it  Is  pur- 
sued today,  is  a  most  intereatiufir  study. 
•■Every  bet^irming:  is  difficult,"  aays  the  prov- 
erb, and  this  holds  with  reference  to  politi- 
cal economy:  bit  when  ono  once  conquers 
the  difflcultios  of  the  besrlnning,  no  Intelloc- 
,tual  pursuit  can  be  more  fa^joinutlngr  than 
i  that  which  is  concerned  with  an  examination 
into  the  nature,  the  doveiopmout  and  the  de- 
•Irablo  constitution  of  industrial  8ool«ty.  It 
Inay  bo  doubted,  however,  whather  any  one 
of  ihe  many  topics  with  which  It  deals  is  of 
more  absorbing  intereit  than  monopolie:", 
■while  it  scarcely  admits  of  controversy  that 
no  economic  topic  is  less  understood. 


It  is  uL'cceaary  in  a  aiaousaion  of  monopo- 
1.  i  to  divide  them  Into  classes,  for  the  priu- 
icipleg  which  hold  for  one  class  will  b»  found 
[In:       '      ble  to  another,  and    any    effort  to 
hi     .  monopolies  together,  and  to  treat 

them  "all  alike  will  produce  confusion,  both  ' 
In  theory  and  praciioe.     Monopolies  are  now /j 
disouased  daily  in  the  press  in  thaJr  oonnec/ 
tion  with  the   tariff,  and  trusts,  und  syndi- 
cates, but  it  cannot  be  snld  that  the;  discua- 
Blt)n  produces  a  Kreat  amount  of  light.    Itis, 
however,  accompanied    by    prowlr/g:   indii?- 
nation  as  the  evils  of  certain  monopolies  ai 
more  and  more  k»anly  felt,  but  tkis  indlg:- 
tiation  is  as  likely  to  produce  harm  as  cood, 
UnlesB  it  can  be  directed  iat6  propar  chan- 
nels.    While   it  may  b«   claimed    that   the 
indig-nation  is  rlirhteous,  it  is  indeed  a  bold 
man  who  would  be  willing:  to  say  that  it  Is 
enlishtened.i 

Monopolies  with  rrsprot  to  ownership  and 
{management  may  ba  divided  into  two  classes, 
[public  and  privaif.  The  postofRoe  is  a  pub- 
lie  monopoly  and  Is  a  national  blesslnsf.  The 
telet^raph  is  a  private  monopoly,  and  the  fact 
|that  it  is  so  is  n<;ihlnir  less  than  a  national 
|C.'ilamity.  Private  monopolies  ar®  odioug. 
jThey  are  contrary  to  the  spirit  of  the  oora- 
jmon  law  and  of  American  institutions,  and 
wherever  or  whenever  they  exist,  are  a  per- 
petual source  of  annoyance  and  irritation. 
Public  monopolies,  on  the  other  hand,  are 
productive  of  vast  benefits  when  confined  to 
their  own  proper  sphere.  Modern  civilization  I 
would  srive  place  to  anarchy  should  all  public 
monopolies  be  abolished.  The  army  and  tjavy 
and  police  are  public  monopolies,  and  when 
we  see  e-reat  corporationii,a3  in  Peansylvania, 
lemploying-  orivaie  armies  of  their  own,  mer- 
cenary troops  eneaaroU  of  a  citizen  of  another 
State,  thinkintr  people  look  upon  It  with 
alarm  as  incipient  anarchy  of  the  m-  st  malie- 
nant  type.  We  must,  then,  draw  a  sbaip  line 
In  all  our  discussions  between  public  aad  pri- 
vate monopolies. 

13 ut  monopolies  may  be  divided  infto  two 
different   cUsses   from   another  standpoint. 
Certain  pursuits  are  monopolies  on  account 
Of  their  own  inl)er«»nt  qualities.    Thwe  we 
call  natural  monopolies.    Legislation  neither  i 
makes  them  monopolies  nor  oan  it  Tjrevent 
them  from  becomiijg:  monopilles.    All  tkat 
legislation  can  do  is   to  recognize  the   fact 
that  they  are  and  must  rem'.in  monopolies, 
and  to  act  upon  it.    There  are  other  pursuits 
Which  aro  made  monopolies  by  leci'latlon, 
at)d    these    we     call    artificial    naonopolies. 
Patents     throw     around      thos©      eng^atred 
In    the    manufacture     of     certain    articles 
a    barrier     which     shuts   out    eompetition. 
The  production  of  a  new  American  book  ia  an 
artificial  monopoly,  rendered  sueh  by  a  copr- 
rip-ht.    Legislation  could,  if  it  ware  tboutrht 
desirable,  abolish  both  patents  and  copyrlsrht's, 
and    thus   do   away  wita  thoee   monopolies 
which  they  create.  Swltzerlan*  is  an  exaraple 
of  a  country  which  does  Hot  rrant  Dateats, 
and  thus  does  not  create  by  means  of  patents 
artificial  monopolies.    Tariffs,  which  shut  out 
foreign  oompetition,  sometime*  enable  home 
producers    to    form   »i|rantlc    combinations 
which  crush  in  a  e^rasp  of  relentlMS  cruelty 
every  attempt    at   compatitien  wlthia   our 
own     borders.    These    combinations    could 
rarely    embrace   the   entire   elrllizod  world 
were   every    feature   of    protectionism   re- 
moved from  our  tariff   letrialatloa.      These 
pursuits  are,  therefore,  also  artificial  monop- 
olies, and  they  are  daily  incre.tsinsr   in    num- 
ber to  the  consternation  of  tbe  public.    Per- 
haps  1   outrht  to  make  an  exception  when  I 
say    that    tke   increase  of  monopolies  of  tiie 
lartiflcittl   sort   Is  viewed  with  alarm  by  the 
public.    Socialists  view  it  with    satisfacaou, 
;because    they    believe  that   competition   in 
jlndustry  Is  an  evil  which  oucht  to  toake  way 
jfor  complete  and   perfect  monopolr  In  every 
fpursuit.    Socialists   see  in  trusts  and  syodi- 
catps  nothing   but  the  renaorseless  maroh  of 


inouopnly,  whicG  Vbjay  aayio  luut:.  ptwaiotea 
will  never  cease  until  ooaoo«trfttlO!v  of 'busi- 
ness become*  eompjet*.  Th«  last  stasre 
In  this  evolution,  sccording  to  tbeir 
doctrine,  is  the  transfer  of  monopolized 
business  to  public  control  and  the  conse- 
quent inauaruiation  of  the  8oci»ligtic  state. 
The  capiralista  en^asred  in  thase  com- 
blnatious  are  hailed  by  80ol»li»tlo  writers 
as  fellow-social  is  I?,  and  the  socialistic  ten- 
dency in  trusts  and  other  artificial  monopo- 
lies admit  of  no  doubt.  When  ■»»•  come  to  a 
discussion  of  artificial  monopolies  we,  in 
fact,  touch  the  only  really  daajrero us  social- 
ism in  the  United  States.  Those  who  spend 
enerpy  in  figrhtins'  the  socialism  of  thtj  doc- 
trianaires  who  write  books  and  deliver  lec- 
tures are,  in  my  opinion,  simply  Don  Quix- 
otes attacking:  windmills.  "The  tramo  isn't 
wort  the  candle,"  and  that  is  tiB«  reasou 
why— if  a  personal  eipianatioa  is  in 
order— I  have  never  spent  muGb  tlm« 
in  criticism  of  the  socialists,  I  hava 
believed  there  were  certain  truths  in 
the  teachiDKTS  of  scientifio  socialism 
which  it  is  well  enough  to  notice,  but  the 
prospect  of  professed  socialists  evar  raininc 
an  ascendency  in  America  baa  seemed  to  noe 
BO  remote  a  continsfsncy  tbat  I  have  never 
thonjjht  it  worth  the  while  to  spoil  pen  and 
paper  and  waste  ink  in  exposing  their  errors. 
The  results  of  years  of  study,  reflectioa  and 
Investigation  have  convinced  me  that  the 
only  danRcrous  socialism  in  America  is 
monopoly  controlled  bv  private  greed.  This 
is  sufficiently  important  to  justify  us  in 
piviusr  some  attention  to  the  views  of  one  of 
the  most  rational  socialists,  who  sees  the 
approaching:  triumph  of  bis  faith  in 
the  "trust."  I  refer  to  Lawrence 
Gronlund,  who,  in  his  now  work, 
*'Ca  Ira,  or  Dantoa  in  the  Preoch  Revolu- 
tion," speaks  of  the  socialistic  tendency  of 
business  in  America  lu  these  words:  "Of 
the  movements  by  individuals,  the  most  sitf- 
niflcant  is  that  toward  production  on  a  large 
tcale.  By  •production'  should  also  bo  under- 
stood transportation  and  commercw,  for  they 
Edd  value  to  tne  product,  just  as  well  as  doas 
the  labor  of  tl3e  oparattves  on  raw  materials. 
All  that  is  necessary  here  is  to  note  this  ten- 
dency, for  all  admit  that  production  every- 
where—the most  trivial  as  well  as  the  most 
important— is  bolnsr  concentrated  in  the 
hands  of  richer  and  richer  employers,  of 
larg-er  and  larjjer  corporations. 

"But  there   is   one   feature   of    this   con- 
centration   tbat    deserves    special   mention 
because     it     is     novel,    and      as     yet     It 
seems  confined  to  the  United  States,  where 
the  capitalist  system  Is  more  unfettered  tdan 
anywhere  else.    It  is  what  is  called  ihe  Trust. 
This  is  monopoly  In  its  most  concentrated 
form.    Suppose  the  presidents  of  all  the  in- 
corporated companies  In  a  >?lven   branch  of 
industry  in  the  whole  country  assembled,  and 
one  of  their  number  in  whom  they  all  have 
perfect  trust- hence  the  name— selectei  to 
perform  »he  function  of   abtoluii  manaarer, 
with  power  to  detereiine,  autocratically,  how 
much  each  company  is  to  produce,  and  ooa- 
sequentiy  its  share  in  the  proceeds,  aiad  rou 
have  the  'trust.'    It  differs  from  a  'pool'  In 
this,  that  none  of  the  parties  can  withdraw. 
The     individuality     which     the    law    con- 
fers   on    each     company    by    the     act     of 
incorporation  is  merred   in  the  *trust,'  over 
which  the  Si  ate  hKS  not  the  least  control;  in- 
deed, the  whole  arrangement  is  kept  as  per- 
fect a  secret,  as  far  as  the  nubile  is  concerned. 
as  possible.    *****    It  is  easy  to  see, 
that,  whtn  ths'SO   'trusts'    become  arenerai, 
and   that  is  only  a  qusstion  of    very  short 
time,  they  will  rovolutlonizo  our  present  sys- 
tem, for  they  mean  the  destruction  of  cotii- 
petition,  which  taea  will  ds  utilized  simpiy 
to  crush  their  weaker  rivals.    Some  of  our 
newspapers,   on     jrettinar     wind     of     these 
'trusts.'   have    become  alarmvd,  seeinr   iu 
them  terrible  future  dancers  to  the  State, 
and     that,    indeed,    they    would    be;    they 
would   institute   a   new    slavery,    the  most 
formidabio     slavery      tbat     ever     existed, 


If  evolution  would  stop  there  But  it 
will     not.    That    la     whv    fM-    «,^J^       '^ 

lis  at  the  bottom.  an\^c^^ioJ'o^eThVSnl' 
.  talistsontrafi-ed  in  it  are  unconaoinn-?,,  ♦?'" 

■  .greatest  revolutionists  m  'the  w^d'^^'  '^^ 

coi?RTob^"ori^.^;jrn?f/a't!iT;  "^^     » 

mode  ofproouctim  int^futun"'^  facucal 

CUSSion  of  monopo!l«8      No  nVnhW  ^#  f  ^**" 

cause  ^an7^^  coZt^^l,'^Sf''Tol^o^^^^^^ 
protect  orumi.  mn»t  dea^rvlnj  of  at?int^on 
We  Will  Dt>irln  the  discusaioL  Vf  minonZ' 
by  a   treatmpRt   of  naturoi    mr^W^i^V      "^^^ 
cause  that  will  help  to   cWr  th«    fl^^  m*'.^^ 
render   tho     cfcaracterijties      of    ^artiflcSkl 

man,  but  was  itiven  to  man  ready  m«?ip    ^7^ 
was   a  gift   of  nature,  or,  if   J^S  Seitn  If 
God.    5ut  go  much  w^s  fflven,  and  no  more 
?akeawav°fril*it"i*°  ^"'^  •'^^  ?oTanTor 

more  attention  than  it  ^  VeilivfuJ     i Vl5 
Kladlv  rak«  iirw  tVt.  re<3aiviiktf.    I  would 

caref ullv  t*y.^  it^^  QU«sttion  and  discuss  it 
i^areruuy,  were  it  not  so    «r»p»  n  nii««f ir>r,     t* 

equafe  Irh^yVr^ZriuS^  efforts-fnad- 

are   encourasine     It  <?  tn  hi   h.^i"^'^^'*"'''^ 
further  step  wlfle  taken  anStharthl^^'  ^ 

be  tlfeVnT/tmie  Je'n^^kT  o1"fhr ^^^ 
Sfv7bee"nT;ne°^o?'t>'*^l-     ^^^orfunat'e  'al 

u/lv  feltn^iS'S*'  *^  "•*^"''*^  monopoly.  Tbe 
u^  feature^  his^^jiutioajfihjspro^^^^ 

conflscaiion    of     the    rent     of     land,    but 
the      view     which      Cardinal      Gibbons-if 
current     reports    may     be     trusted— takes 
or     Ills     comptcraniated      measure     seems 
to  me  most   sensible.    I  do  not    believe  it 
^T,  ;  ^JJ^  appear  to  the  American  people  a 
JUHt   thinp-    to    take    the   property  of   land- 
owners without  compensation.    I  do  not  be- 
lieve that  the  moral  sen^^e  of  the  American 
P«^f,  .      will  ever    rolorate  any  serious  steps 
looifin?  to  the  confiscation  of  thisspsciea  of 
property.    To  me-whatever  false  accusatioa 
mf:y  have  been  brought  arainu;  me  to  the 
coi  trary  notwitbstandintf— it   has   ever  ap- 
peared a  cruel  and  unjust  thintr  to  do,  and 
tuus  1   hav«   al,vavg    t.iufht.     However,    it 
seems  to  me  -  as  to  Cardinal   Gibbons   evi- 
aently— a  waste  of  breath  to  refute  the  errors 
or   Henry  George.     Ttiey  are   not  a  living' 
issue.    It  is,  however,  worth  our  while  dill- 
Siiiuly  to  read  a  book  like  "Proeress   and 
ii'overty,"  and  to  jjather  from  it  the  useful 
lessons  which  It  undoubtedly  teaches.    With  , 
this  I  leave  the  land  question  for  the  present 
and  pa«S  over  to  othor  natural  monopolies. 


"LU 


TJ 


»F  COMPETITION. 


1  .  Not  Always  a  Desirable  Thins— 
I'rof.  Bichard  T.  iilly  Uiscourses  Upon 
the  Subject  of  Natural  Monopolies. 

rWrltten  for  tho  }J  .itiinore  Sun.l 

ARTICLE  XVIII. 

i  •ooftheiiJ  ■   iifindifiruRtion  with 

\sj ...uuopolies  Hi.      -.  v'dU   by  tbo  pul)Uc 

aecumulaies  daily.  Mr.  Rnyoer,  who  so  ably 
n  •  :  >  '  ta  a  Maryland  constliuenoy,  Has 
tLVUfiuc  u  bill  into  Conpreb's  for  tlie  r,iprea- 
Bioii  of  trusts  and  other  coriJorat*  oomblna-. 
tloas,  wbile  an  iavestitration  into  this  subject 
liaa  actually  beeti  oiUered.  A  sitnilar  bill  has 
been  brought  forward  in  the  Lacislature  of 
New  York,  and  in  Illinois  proceodiutrfl  a£rair-St 
the  Cbicato  Gas  Tru^t  hare  been  insiituted. 
Can  any  question  be  mora  thorousrhly  allro 
than  lUi»?  Ami  Is  it  not  worth  wbU©  to  care- 
fully consider  the  subject  of  monopolies  in 
all  its  ramiilca'.ions  in  ordrr  that  we  may 
kaow  how  to  deal  with  it  practically?  The 
truta  it  that  wo  have  coaie  to  %  critical 
period  In  our  ecojiomic  doyelopmont,  and 
aerent  opportunity  !<<  offered  our  various  leg- 
i  "  bcdia.<  to  do  something:  of  permanent 

1  for    th«   peoDi'^     When    a    learned 

judffe,  well-known  iu  Baltimorf,  heard  some 
tiiueaiTO  that  I  Intended  to  write  a  series  of 
artlules  on  corporations,  he  «t;nt  ms  tbli 
n  ve:    "Lf.y  on  and  spare  not."    The  timo 

1  :iie  when  lecrislators  and  Confrre«smen  , 

mav  "lay  on  and  spare  not,"  and  f«el  sure 
that  the  paople  will  support  th(»m.  I  dislike 
tt)  mention  tb©  name  of  Cnrdinal  Gibbona 
airaio,  bec«uie  I  wish  to  k«ep  this  i«ori©i  of 
articlPS  as  free  from  pcr«onalitt«B  as  oOMible, 
but  I  cannot  refrain  from  mention  of  his  able 
paper   on  the   Kuiahts  of  Lshor,  which,  it 

-Tastome, is  a  documentor  historical  im- 
^-rcance,  and  that  on  this  account:    He  said 
in  that;  loiter  that  the  time  had  come  in  the 
world's   history   when    the     church    ghouid 
•eej£    an    alliance    with    the     masses,     and 
should        abandon        special      efforis       to 
conciliate  the  mighty  m  war,  the  powerful 
in  trade,  tho  great  ones  of  tbia  earth,  because 
In  the  future  tne  control  of  the  destinies  of 
the  world  I esttd  with   the  people.    It  seeraa 
to  me  that  tnere  never  was  so  auspicious  a 
ti;re  for  a  irreat  popular  ieadov  as  now.   Such 
a  one,  cutting  loiso  from  the  influence  of 
cotpnrato  combinations   and   all  special  In- 
leiwats,  could  become  a  veritable   Moses  for 
tho  American  people  and  win  Immnrtal  fame. 
But  wno  has  the   moral    character,  couplod 
With  the  qualities  of  leadership,  on  the  one 
hand,  and.  on  the  other,  the  sirf=n»rth  of  in- 
tellect rtqui'-iie  for  a  correct /ipprehonsion 
of  our  social,  ludu*trlal  and  political  situa- 
tion?    It   is    too  much   to   be  feared    that 
this    opportunity  will     be    allowed    to   slip 
by,    aiid     throuifh     failure      to     dlscrlial- 
Dato  between  various  classes  et    moeopulied 
and  to  treat  eacti  by  itself  absolutely   noth- 
ing  of    periiianeut   utility    will    be   acooni- 
piished.    The  (Erranjrers  in  our  Western  States 
gained  complete  control  of  several  Le/flsla- 
tures  and  endeavored  to  restrain  corporations 
from  domiuailou  in    the  future.    Wut  wfeat 
did  they  aououiplisb?    Something    undoubt- 
edly.   Yet  it  may  be  questioned  whether  cor- 
porate domination  was  ever  te  marked  in  oar 
West  as  it  is  today,  ana  everyone  knews  that 
a  considerable  poriios  of  what  was  done  has 
since   been    undone.    It  strikes  lae  that  the 
farmers  have    been   worited  in  the  conflict. 
Now,  what  is  the  reason  that  they  bare  teeen 
driven     from     their     vantare-rrouud     and 
routed?    Simply  becauss  liK^y  did  not  under- 
stand tno  mature  of  tue  aubjtctd  with  wnieh 
they  were  dealiusr. 

When    we   hear   speeches   on    menopoUes 

I  DOW,  and  read  articles  ou  oombinatiwHS,  euo 

tiioufht  is  found  to  be  cletrly  hrouffecfer- 

ward,  and  onlv  one.    It  is  thia:    Conapetiuou 


|/»  our  Balva  .^  a  tke  life  ef 

trade;  combiia  lous  preveat  ooaapetlilon, 
cone^qneutly  they  are  injurious  antf  skeuld 
be  abolijhed.  St.ftt«d  in  tbia  reneral  foria,  the 
propoBJtion  is  not  true.  Compeiltion  is  net 
always  a  tood  thing;  compotltioa  decs  not 
;  always  lower  prices;  on  tbe  contrary.  It  fre- 
quently raises  prices;  competitiou  is  not 
always  a  possltjiiity;  competition  has  pro- 
duced marvelous  results  in  those  pursuits 
which  are  adaptod  to  oom petition,  and  this 
unwarranted  conclusion  is  <rawn  froas  ilie 
fact  that  competition  everywhere  and  at  all 
tinios  la  a  ifood  thing.  The  practical  daaiper 
which  confronts  us  is  this— that  in  attempt- 
inif  to  force  the  application  of  the  principles 
of  competition  t«  those  puriuit*  whioti  arc 
not  adapted  to  competitlOB  we  will  mle«  our 
present  opportunity  and  do  more  harra  thau 
Kood. 

There  are  certain  businesses  which  are  In 
their  very  nature— by  reason,  1  meaaof  their 
own  inherent  qualities— monopoliefl.  These 
we  call  natural  monopolies,  and  any  en- 
deavor to  regulate  natural  and  artiflcial 
monopolies  by  the  same  law  is  predestined  to 
failure  in  the  future,  as  it  always  has  failed 
in  the  past.  Had,  indeed,  the  problen  of 
natural  monopolies  been  solved  lu  the  past, 
there  would  be  few  artificial  monopolies,  and 
these  oould  be  manatred  without  difficulty. 
Natural  monopolios  are  the  basis  of  all  aao- 
nopoiies  of  modern  times. 

The  fact  that  certain  businesses  are  natural 
monopolies  has  been  so  amply  shown  both  hy 
actual  experience  and  by  aa  elaboration  of 
economic  principles  that  1  can  scaroely  re- 
gard it  as  anythiuir  elM  than  an  evidence  of 
iprnorance  for  any  one  to  deny  it;  yet  our 
habits  of  thougrht  are  so  governed  by  princi- 
ples of  competition  that  it  is  difficult  to  make 
this  Clear  to  those  not  accustomed  to  eco- 
nomic discussions.  I  beg-  my  readers,  there- 
fore, to  be  patient  while  t  attempt  to  explain 
veirv  carefully,  and  at  as  much  length  as  tais 
series  of  articles  will  warrant,  the  doctrine  of 
natural  monopolies. 

It  will  be  most  convenient  to  begin  by  an 
enumeraiiott  of  those  businesses  which  are 
natural  monopolies.  They  are  gas-iupply, 
street-car  service,  highways  and  streets, 
electric  lighting,  all  rail »v ays,  canals,  bridges, 
lighthouses,  ferries,  docks,  harbors,  aatural 
navigations,  postal  service,  teleirraBtas  and 
telephones.  This,  doubtless,  does  wot  include 
all  natural  monopolies,  but  wiiti  the  excep- 
tion of  land,  which  will  not  be  discussed,  it 
embraces  all  the  more  ircportr.nt  aatural 
monopolies  existiujr  at  the  present  tlnte.  It 
is  cliimed  that  the  regulatio  .  of  these  nat- 
ural monopolies  must  be  different  from  the 
rrpulailoa  of  commerce,  agrriculture  aad 
manufactures,  beoauee  the  underlying 
principles  of  these  pursuits  are  peculiar. 
Now,  it  must  not  be  supposed  tiiat  competi- 
tion is  never  felt  by  those  who  are  intercated 
in  natural  monopolies.  On  the  contrary,  they 
at;  times  feel  the  keenest  kind  of  competi- 
tion. A  pursuit  is  a  natural  monop- 
oly when  It  is  excluded  from  the 
steady,  constant  pressure  of  competition. 
Whan  natural  monopolies  are  enraged  in  in- 
duatrial  contests  these  contusti  can  after  all 
scarcely  be  called  competition,  and  popular 
instinoi  feels  this,  for  It  finds  Involuntary  ex- 
pression in  language.  We  speak  ef  struggles 
between  natural  nnonopolles  as  war.  *'A  war 
bab  broicen  out  between  the  gas  companies," 
or  between  the  trunk  line  railways,  people 
say,  and  It  is  war  in  it«  characterlstloa.  It  is 
destructive,  and  has,  ike  war,  a  termination 
of  hostilities  In  view.  Comnetition,  oa  ih* 
other  hand,  never  teptninatRS.  It  is  not  a 
fierce  and  destructive  onslaurhc,  byta  steady 
pressure  which  tends  te  stimulate  eaterprlse 
and  to  bring  about  fair  donling.  Compare 
a  firm  like  Hamiit)a  E.ister  &  Co.  with 
the  Consolidated  Gas  Company.  The  oae 
is  subject  to  assaults  from  lime  tetlme  which 
always  termiaate,  and  muat  a?  surely  tersu- 
uate  as  ttjmorrow's  sun  must  rlse.while  Itoen 


f 

^  ri 


scarcely  eoteiTrito  th".  riCncrdl^ffBfflan  pryh- 
abiiities  ihftt  the  other  can  .ver  termIn»tJ  it 
i.  hoped  that  the  difference  is  ollar  I?  ii  la 
faJiacies  of  those  who  claim  that  firorernm«nt 

br«ad       Th'-f  if  a'^^/.^^^r"  *^«  fl<»ur  lutS 
.ur«aa.      idi«  is  a   favorite   arramt^nt  witb 

inouopolis.s,  and  is  thus  .ratad^u  a  relent 

edlcorml  in  a  journal  published  ic  a  nejJh 

borioer  city:    "Tbera  ig  no  m*re  Reason  why 

the   fiwvernment   should   onaratp    tha    tli. 

p.ph  than  run  ihefluur  aills-fe.*  fa  faor 

for  ereiTbody  uses  flour,  whil.  It  Is  diuK 

It  even  three  per  cent.  Of  th.  people  u»«  the 

;  telegraph  "    it  would  b«  hard  ta  pack  more 

buit  IS  a  natural  monopoly,  ttie  other  not  Vnri 

mh^.r^^^M^^.''?,  ^°^  ^«  "^^  applicable  "Jo  tSe 
other.  Secondly,  charjres  for  tb«  ug*  of  « 
natural  monopoly  are  part  of  the  expsngeg  of 
business,  and,  like  indirect  taxc^  ar«  .hffted 

.   While  certain  pursuits  are  liable  to  b*  In- 
i^of  ?  by  war  tb«y  are  not  and  cannot  be  aub- 
ject  to  the  steady  pressure  of  competition 
These  pursuiu  fire  uatural   nionopo  fta     w« 
w.II  be  helped  to  understand  why   tSer  Tre 
natural  mouopoll&s  if  some  of  tkeir  peculi.ri 
tifea  are  deacribad,  and  I  will  quote  from  a  re 
cent  cArefuI  writer,  and   then  pasR  on  to  a 
further   consideration   of    certain    puzzlinJ 
fils-  connected  with  natural  £onopo- 

W'  ^}^^'^  they  supply  is  necessary. 

or  Lfi'Sfu^nT"^  """'"""•'^  '•""'^  "°'= 
,  "3.  Thf  article  or  conven  lence  they  aunniT 
18  used  at  the  place  where,  and  In  cSSSoc^ 
ion  wi*  the  planter  mflchinery  by  Xch 
It  18  supplied.  ^    w"ica 

^  "K't?'^^^*'°^®  °^conveuieuoe  can  in  gen- 
eral be?  JaPK.ly,  if  not  indefinitely,     Dcrefsed 

Japft^/  ^'''^°''^^°'^''  ^^'^'^-^^  ^^  Plaut^  and 

r^v^V^®*'^**"*^  *"^  harmonious  arranffoment 
which  can  only  be  obtained  by  ualty,arepa?a. 
mouac  considf  rations."  ^iJ,aiop«ra- 


PROBLEMS  OF  TODAY. 

COMPETITION    OUT   OF    PLACE. 

NATURAL  MONOPOLIES  DEFY  RIVALRY. 

Prof.    Richard   T.  Ely»»  Tiews   on   Mon- 
opoly and  Competition  Continued. 

[Written  for  the  Baltimore  Sun.  I 

ARTICLBJ  XIX. 

The  qualities  of  natural  monopolies  enu- 
merated in  the  previous  article  are  sufflcient 
to  show  one  versed  in  the  principles  of  indus- 
trial society  vrhy  those  pursuits  to  which 
these  qualities  pertain  must  be  monopolies. 
They  can  hardly  be  regarded  as  entirely  sat- 
Isffictoryto  one  to  whom  economic  discus- 
Bions  are  not  familiar.  It  is  said  that  Ajrassiz 
could  draw  a  picture  of  an  animal  if  he  but 
saw  a  sinfrle  bone  which  had  once  been  part 
of  its  frame,  because  natural  laws  which  he 
had  grasped  showed  him  that  the  peculiarl- 
Ties  of  the  bone  which  he  saw  necessarily 
deterramed  the  structure  of  the  animal  which 
fte  did  not  see.  It  is  not  enoush,  however, 
for  us  not  versed  In  natural  science  to  feee  a 
bone;  we  want  a  comnlete  drawing  cf  the 
animal.  It  is  similar  with  resrard  to  economic 
institutions,  onlv  that  there  is  this  important 
difference:  Political  economy  ja  not  so  far 
advanced  as  natural  science,  and  the  political 
economist  has  not  so  marked  an  advantag-d 
m  hia  specialty  over  the  ordinary  man. 

The  reason  why  some  pursuits  are  monopo- 
lies may  be  stated  in  a  somtiwhat  different 
"wav.  Why  do  men  enter, business?  To  make 
money.  This  is  the' dominant  motive,  and 
this  Keeps  the  w_prld  jroinc.    I  do  not  mean 


,  that  men  are  not  anima!!e(i  hy  other  luutive"* 
nor  would  I  have  it  thoug-bt  that  even  all 
commercial  transactions  can  be  explained  by 
the  pursuit  of  sain.    I  simply  state  that  this 
^°r't*^  X    sufficient  for  our  present  purposes, 
and  that,  ordinarily,  if  a  m' n  in  business  is 
permanently— not  temporarily,  but  steadily, 
year  after  year— losintr  monfy,  it  ig  a  sien 
that     his     activity     i«     wasteful,     Involv- 
intr     a    loss     to    the     community    as    well 
as     to     himself.      Havine    fixed    this    fact 
in    mind    that    the    dominant    motive    in 
business  Is   pain,  it  follows   naturally   that 
those   business   methods  which    yield   mt)8t 
pain  are  bound  to  prevail  and  to  drive  from 
the  field  of  competition  lesg  profitable  busi- 
ness methods.    We  have  in  these  two  simple 
facts  an  e;tplanation  of  natural  monopoly. 
Business  of  the  kind  mentioned  can  be  most 
advantae-eoutHly  pursued  under  the  form  of 
monopoly.     The   services   or   thing-s   which 
they  supply  ciin  be  produced  not  merely  for 
a  smaller  eipeoditure  of  laborer  capital,  but 
for  a  far  smaller  expenditure.    There  is,  con- 
Bequently,  always   an    increase  in   Rain  for 
those  men  intere^tPd  in  natural  monopolies 
who   can    brinar   about  a  combination,   and 
this   increase   in  gain  is  a  c  .nstant,  never- 
ceasinff   attraction,    tendinj?   to  brinar  rivals 
together.    It  is  a  steady  force  lixe  the  attrac- 
tion of  )!?ravitation,  and  it  will  act  in  spite  of 
all  legrislative  enactment.    Ic  transcends  in 
power  ;any  State  locrislature  and    even  the 
federal  Congress.    But  I  po  further  than  this. 
Prom  the  standpoint  of  political  economy, 
which  desires  a  cheap  and  abvm  dant  produc- 
tRn  of  {roods  and  services,  the  monopolistic 
method    of    production   for  those   pursuits 
which  are  natural  monopolies  is  nnt  merely 
Bomething- inevitable;  it  is  somethinpr  desir- 
able, for  attempts  at  competition  waste   the 
national  resources  and  tend  to  bring   about 
commercial  crises  and  stagnation  In  business. 
We  want  monopoly  In  pas  supply,  water  sup- 
ply and  the  like;  the  only  question  is  what 
kind  of  a  monopoly? 

Perhnps  the  tendency  to  monopoly  will  be 
made  clearer  by  an  illustration.  Let  us  sup- 
pose two  pas  cnmpanies  are  competing,  and 
each  has  a  capital  of  $1,000,000.  The  total 
capital  eneaK-ed  in  the  pas  business  is 
$2,000,000.  If  the  two  consolidate,  the  amount 
of  capital  already  invested  will  not  be  mate- 
rially lessened,  but  expen-^es  will  be  reduced. 
Instead  of  two  central  offices  there  vriil  pe 
one,  and  the  dupl  cation  of  mains  will  be 
avoided  for  the  future.  Fewer  collectors 
will  be  needed,  fewer  men  to  distribute  bills, 
fewer  men  to  put  In  meters,  and  the  in- 
creased output  of  pas  willnotbeatrendea  with 
a  proportionate  increase  of  cost.  If  it  costs  a 
certain  sum  to  manufacture  ten  million  cubic 
feet  of  eas.  It  will  not  cost  twice  as  much  to 
manufacture  twenty  millions. 

This  article  can  "br<  largely.  If  not  Indefi- 
nitely, Increased  without  proportionate  in- 
crease in  plant  and  capital."  There  is.  then, 
always  a  very  considerable  advantage  in  com- 
bination. 

It  may  be  asked,  then,  whv  are  there  so 
many  attempts  at  competition?    The  answer 
is  very  simple.    The  number  of  enterprises 
in  ffas  supply  which  attempt  legitimate  com- 
petition is  extremely  small,  and  can  only  be 
made   by  those  who  do  not  understand  the 
business.    Most  npparent  attempts  at  compe- 
tition are  simply  raids  on  a  company  which 
has  a  good  business,  and  the  end  in  view  is  a 
division  of  the  business  and  a  participation 
In  the  spoils.    A  test  is  easy.    When  a  new 
pas  company  is  formed  in  the  interest  of  the 
'dear       people"       in       order       to       give 
them,      as      it      Is      usually      said,       the 
benefits  of  competition,  let  the  confluent  citi- 
zen take  the  managers  at  their  word  and  ask 
them  to  make  a  contract  to  supply  gas  at  the 
current  low  rate  for  a  number  of  years,  and 
be  will  find  that  they  will  refuse.    Rates  go 
down  and  a  bitter  strugirle  ensues,  but  it  is 
not  competition.    It  is  a  flght  for  mastery. 
Trhe  only  question  at  Issue  is:  Under  what 
terms  shall  we  combine  or  in  what  manner 
shall   territory   be    divided?     This   has   no 


h 


w 


timore,  for  oHf  case 
i^  oui  .Hit'  oi  inuusauud,  althouffb  I  brljeve  It 
rarely  takes  so  long:  to  come  to  an  airreemeDt. 
xseverthole^s  here,  ag  eh^-where,  it  is  only  a 
matter  of  tinio.  and  ahuuld  la  the  future  a 
thousand  new  oompanies  be  established 
the     result     would     be     oomblnatioo.    for 

L*n  iT'.L  f'^^wEn "'^  It  about,  and  no  one 
can  help  it.  While  we  have  the  testimony  of 
reascn  we  are  not  rostricted  to  that,  for  we 
have  the  testimony  of  experience.  It  is  prob- 
ably within  bounds  to  say  that  over  three 
thdusand  vt-ry  likely  ten  thousand,  attempts 

S,..d'i'"?n'^*'?[?ic'"  ^f  «"PPly  *>»»^«  been 
made  In  this  and  other  countrios, 
and     the    cpnlizea    world    has    yet    to    shwi 

5-»/ ./'**'',  w^"*'"''^*     ^f    Permanent,     svccess^ 
Sj^lccmpeiition  m  gassuppfy-axid  this  natural 

Slr^^ip^'^for  '''''  ^f  ^'-^"t  from  others,  but  Is 
selected   for  speoial   noneideration  because  it 
Js    more    easily    understood      on     account 
Of    the    restricted    scope     of    action    of    a 
flintrle     pas     company.      It     must    not    be 
supposed     that     the     amount    of     capital 
required  for  an  undertaki-  jr  is  an  essential 
Tacior  in   determlnina:  whether  it  shall  be  a 
natur  .1  monopoly  or  not,   for  this  is  variable, 
and  it  often   happens  that  a  business  alu  ays 
•ubjoctto  competition  has  a  larger  capital 
than  one  which  has  the  field  all  to  itself     A 
bank  may,  often  does,  have  a  laricer  caoital 
thana^as  conipany;  so  may  a  dry  Voods  es- 
tablishment.   Profe89-)r  Henry 'CAdam^  In 
his  moriouraph  on  the  ^'Relation' of  vffirkte 
to  Indiistnal  Action."  divides  business  into 
three  classes,  namely:    (1,)  those  of  diminish- 
Inpr  returns;  (2,)  those  of  constant  returns.  (3 ) 
those  of  ir.creasine:  returns.    An  undertakin'ff 
IS  a  business  of  diminishin«r  returns  whert  af- 
ter a  certain  point,  soon  reached,  an  additional 
investment   of  labor  and  eapitkl  is   not  at- 
tended with  proportional  returns.    Asrricu^ 
ture  18  the  best  illustration.    After  ^farmer 
puts  a  certain  amount  of  labor  and  capitaloD 
a  field  or  corn   he  says,  it  does  not  pay  to  in- 
vest more.    If  corn  ouK-ht  to  be  hoed  three 
times.  It  may  be  of   some  use  to  hoe  it  four 
times,  but  the  additior.al  return  will  not  be 
large   enoutfh    to   make  It  pay.    The  fourti? 
hoe  nff  yields  far  less  than  the  third,  the  fifth 
far  less  than  the  fourth  and  so  on.  Similarly 
f/r!f ''*  'T"  of  suitable  size  has  been  brought 
undeT  cultivation  by  one  farmer,  be  will  find 
i»^ff  ^n.l^f:\^  operations,  buy  more  land  and 
S*!!  ™ore  labor  and  capital  into  agriculture 
■will     not     pay.      Consequently     for     one 
man     to     attempt     to     pet    a     monopoly 
inn?""  A  f?^   ''   ^1   absurdity.    It  cannot  hi 
J?f^f;  o  J^r  ^  S^J'^ia  point  has  been  reached 
returns  fall  off,  and  a  man   oDeratinjr  on  a 
Bmaller  scale  has  an  advantac-e.    Commerce 
and  manufactures  are  businesses  of  constant 
returns.    After   a    business   has   attained   a 
normal  size  additional    investments  will  be 
accompanieJ  at  best  with  constant  returns 
and  the  manager  will  have  no  advantajre  over 
others  by  reason  of  an  excessive  amount  of 
capital.    It   IB  Rurprisinar  how  far  a   Rifted 

»v*i^®,^^"l°  !"  °"^  ^ays  can  profitably 
£f.  n^.j?'l  ^"Sineas,  but  everyone  reaches 
his  limit,  and,  except  in  case  of  artificial 
barriers,  Hue  protective  tariffs,  merchants 
and  manufacturers,  like  farmers,  alwayi 
feel  the  pressure  of  competition.  En- 
terprises which  fall  under  the  third 
class  are  quite  different.  The  lareer  the  busi- 
ness the  greater  the  relative  profit,  and  so 
there  is  always  an  Inducement  for  an  en- 
largement of  the  field  of  operations 

i,,^."^  ^^'k  '^  """^  *"*  ,  ^\^""  i'  *8  stated  that  a 
business  becomes  relatively  more  profitable 
in  proportion  as  the  amount  of  capital  in- 
vested Increases,  it  is  already  granted  that 
larjfe  concerns  have  the  power  to  cr ush  small 
ones,  for  if  business  is  more  profitable  it  is 
because  production  Is  cheaper,  and  if  ihe  biir 
mail  produces  cheaper  ho  will  crush  the  little 
man. 

tr^'ll^?^'i'^"^*?•®^P'  competition  are  then 
totally  inapplicable  to  natural  monopolies. 
Competition  is  impossible,  and  att.  mpted 
corapetit  on  wastes  capital  and  ultimately 
raises  prices.     The   temporarily  low   prices 


during  industrial  wars  arc  i.,..,orv.    Let  Ub 
come  bacit  to  the  convenient  illustration  of 
4ras  supply,    a  practical  man   demonstrated 
before  an  association  of  gis  manufactSers 
recently  that  ^ras  could  be  made  unS  sSld  fo? 
a  handsome  profit  at  flfiy  ct-nt^  a  thousand 
This  denjonstrath.n  was  pAuted  i  T  a  joSnai 
devoted  to  the  ga.  i:iterest,and  I  am  Sot  awa?e 
that  among  themselves  gas  men  have  denied 
It.      Yet    there    are   few    American    cities 
vrhere    It    can    profitably    be    made    today 
?h^„.''^'^?°*^  comi^aiiies  f.)r  less  than    twice 
I  that,  and  even  one  dollar  a  thousand  is  con- 
sidered cheap  tras.    Why?    Simply   because 
destructive  gas  wars  have  waSed   propeS:y 
increased  the  fixed  charges  which  gas  cim- 
wi«*""^**'^,®*'*?  ^"'^  rolled  up  tneir  capital- 
jlzatlon  out  of   all  re.<son.     Nu  honest  man 

denv^tS?r  rVn^i"^  ^^^"^  '^^  business  wfl? 
aeny  this.  Gen.  John  Newton  sai>l  rec-ntly 
that  CTHS  In  New  York  city  could  profltab  v 

and  the  high  price  heattriouted  to  the  wastes 
^\.in^.°'S^^""'"',*^  ^'^'^^  '°  ^he  duplication  of 
S-n^f"  ^^^v,'^^^*!  J^'^  companies:  Further 
proof  of  this  statement  U  seen  in  the  fact 
that  cities  which  supply  their  own  gas  and 
exclude  competitiDh  can  do  so  for  lesfthan  a 
fni"^;,     «on-,  Joseph    Chamberlain    when 

tL  H,*d'^?  n**°^^  ^l*"  ^^  ??y  colleagues  tha? 
the  city  of  Birmingham,  England,  purchased 
the  gas  works  at  his  instig  ition  when  he  was 
mayor,  and  that  the  results  wore  most  for- 
tunate. Another  ooilengue  of  mme  who  hna 
lived  in  Manchester,  tell,  me  That  h7 never 
paid  over  sixty-four  cents  a  thousand  and 
TGtthis  price  yields  a  handsome  profit  and 
has  enabled  the  city  to  carry  forward  im- 
provements without  burden  to  the  taxpay- 
ers. Some  towns  in  Scotland  supply  gas  for 
less  than  fifty  cents,  and  I  have  even  heard  of 
a  tweniy-flve-cent  rate,  though  for  that  I 
TVil!  not  vouch. 

•oT^^^Jl"^^  «fv'*^  ?-°  official  statement  of  the 
ras  works  In  Wheeling,  West  Viririnia-  Citv 
bought  the  works  in  1S71  for  $100,000   *Thev 

w?feT«fiSfn"'"''^'?   1^87  were  J39,000,  from 
Which  $6,000  must  be  deducted  for  payment 
©fcitydebi,  and  $:il,009   ror  "repairs,  etc  '' 
leaving  $12,000  ner.    Rates  $1  60  later  $120 
is  Ism.  ^  °'°''-  ^''^  number  Of  iXbifinfs 

♦.•2y«  2"*^'  *°  ^^^^  ^^^  for  arty  cents  In  Bal- 
timore. Now,  cnean  gas  i?  a  great  help  to 
m&nufaoturers,  and  especially  to  those  doing 
businf-ss  on  a  small  scale.  Thus  a  correct 
policy  In  regard  to  this  natural  monopoly  helps 
to  keep  com petl lion  alive  by  preventing  ifll 
unnatural  and  artificial  monopolies,  olher  ■ 
futore'a^  l^V*  ^^^^^°^  ^^^^  ^^  reserved  for  a    -' 

FRANCHISES  SHOULD  BE  SOLD. 

Gas  Works  and  Street  Hallways  Discussed 
by  Prof.  Kichard  T.  tly,  of  Johns  Hop- 
kins University. 

(Written  for  the  Baltimore  Sun.l 

ARTICLE  XX. 

Since  my  last  article  in  this  series  appeared 
a  reader  of  Thb  Son  who  has  lived  in  Belfast, 
Ireland,  for  suino  lime  has  had  the  kindness 
to  send  me  a  letter  about  the  experience  of 

I  the  people  of  that  city  with  the  gas  supply 
and  as  It  18  nearly  typical  I  will  quote  some 

I  extracts  from  the  letter:  "I  have  had  eomo  J  * 

BeK°^lbmi?^mf  '"P^^^  ^"'  the-t5wn-^ 
miiaar.    Anout  fiitepn  years  azo  the  town 

works  mc''o7?h!^^''""  ^"  Puchase  the  ^s 
tv.«  »!;  ^"mf  *^°  company  then  supplying 
the   town.    The   purchase  monev   was  b  r- 

Sr^.onn^n'S  '^^  government.  At  The  time 
the  council  took  over  the  works  the 
gas  company  were  charging  something  like 
5  shillings  ($120)  per  1.000  feet.  Under 
the  management  of  the  gas  committee 
l!.^  ^u"^^^^"^}  on  the  purchase  money 
and  the  requirements  of  the  sinking  fund  for 
Uie  payment  of  the  debt  have  not  only  been 
met,  but  the  committee  have  b'^en  able  to 


make  gradual  reductions  in  the  price  to'  cus- 
tomers. The  price,  1  believe,  is  now  t^vo 
shiiJinjrs  and  nine  pence  (66  cents)  per  1  000 
feet,  and  the  profits  would  justify  a  trreater 
reduction,  but  I  understand  the  committee  ig 
strentrtheniusr  its  position  and  oontinually 
ImprovlnK  Plant  and  machinery.  When  it  is 
considered  that  Belfast  has  to  import  all  ita 
coal  from  Entrland  and  Scotland,  it  can 
readily  be  seen  that  tras  should  be  supplied  at 

fiZ^l^J^^^^  ^^^^^  *"  ^o^ftia   conveniently 

situated  to  coal  mines.    Two  years  ago  the 

Belfast  eas  committee  held  an  exhibition  of 

gas  srovea  and  t?as-hearing:  apoliances,  &c.. 

and  the  exhibition  has  induced  many  to  use 

the  ^as  for  motive  power  and  cookin^r,  etc. 

'       •       ♦       Under  the  English  towns 

improvement    act  town  commis^^ioners  can 

Obtain  compulsory  powers  to  purchase  pas 

i  companieji,  &c.,  if  considered  for  the  benefit 

of  the  public.    It  would  be  a  great  blessing 

if  such  powers  were  conferred  upon  town 

authorities  in  this  country."  j 

There  are  several  things  which   may  be 
done  m  view  of  the  fact  that  the  gas  supply 
18  a  natural  monopoly,  and  one  thing  which 
clear  y  should  not  be  done.    It  should  never 
pe  attempted  to  introduce  or  compel  compe- 
tition between  rival  companies,  for  the  re- 
sult IS  only  evil.    Not  one  particle  of  good 
SmiH?.n''"^«/°  the  public  by  attempted  com- 
petition.   Streets  are  torn  up  and  pavements 
hptiPh  I?"  properly  relaid.    This  injures  the 
health  of  citizeus,  for  nothing  is  better  calcu- 
Uted  to  promote  malaria-as  many  of  us  in 
Baltimore  know  to  our  sorrow— and  it  wastes 
our  property.    If  It  is  urged  that  money  il 
spent,  I  reply  that  such  a  plea  for  competi- 

l^i^i?''°°  wl^  t".^®"^  ^^"°™  Ignorance  or  dema- 
gogism.  What  is  spent  is  wasted,  and  if  not 
so  spent  it  would  nave  been  employed  in 
some  otner  enterprise,  very  likely  a  legiti- 
mate enterprise  which  would  have  really 
beneflto  i  the  people.  *wiijr 

One  9f  the  things  which  may  be  done 

recognize    the    fact  that  an    existing 

pany  nas  a  monopoly,  and  to  make  it  a 

monopoly  in   return  for  concessions. 

1  nrn^no««t !"  a.^o^them  city  recently.   It  was 

!  proposed  to  allow  a  rival  company  the  privi- 

r^f  A  5   "^  Citizens  with  gas,  and  the  members 

awLv   w,Vh'Th'i^^T"^°''V^  '^*^^*'  »^  fl^^t  carried 
w^o^^^  '^  ^^^  *^®*  of  competition,  andlto 

nnnM.^'' -n'™-^*  ™>^"  *^o  *"  the  direction  o!  a 
popular  Illusion  is  shown  by  the  statement 

w«?  «  c^^^^^K-  ^^^*  competition  in  Itself 
was  a  good  thine-,  even  if  tt  accomplished 
notbing.  A  gifted  young lawyer,however,who 
had  read  James  on  gas  supply,  went  before 
trie  council,  aud»  with  every  member  against 
hitn  at  the  start,  was  able  to  convince  them 
?J„o  ♦!,  * '^^^^  "^^^  companies.  The  result 
u!t^i^\.  ^}^^  existing  company  agreed  to 
1  mit  Its  price  at  once,  and  in  a  certain  con- 
tingency to  lower  it  in  the  future.  The 
proper  method  for  the  city  authorities  to  fol- 
tSrTnfli?^^^®  °*^®  °^  *i^«8  supply,  pro- 
^mrl  n'f^°°'  l"'"^^*'  «^^«  itself,  is  very 
simple,    ihe  franchise  should  be  sold  at  pub- 

il.^"'^i"°'.'^^5^'y  advertised,  for  fitieen 
J^^+t^J^^^u  ^^  should  expire,  the  city  reserv- 
J!r  thf  ^^"^'  ^'  repurchase  at  the  expiration 
rr«hm,iH  kL°^  i^^  »°  appraised  valuation. 
It  should  be  made  very  clear  that  plant  and 
other  property  Of  the  corporation  should  be 
purcbasea  only  at  their  value  at  the  time, 
aimIhlHt'.''?;!^H  '"^  '^''''  condition  and  thei^ 
SnV  Si  i^^?  '^®  Durpose  of  the  undertaking, 
but  without  any  addition  f;.r  compulsory^ 
purchase,  good-will  or  future  profited' 

This  method,  or,  in  fact,  any  method  of 
private  ownership  leads  to  entanglement  of 
public  and  private  intere8ts,which  is  demoral- 
izing for  n9thing  promotes  corruption  like 

13  more  wholesome  than  simplicity  in  admin- 
istration. It  16  desirable  tosepaniic  by  as  sharp 
fn^i°^  "^  possible  pu  blic  and  private  undertak- 
ing, and  this  end  can  best  be  accomplished  by 
pwoership  of  gas  works  by  municipalities.  It 
la  on  this  account^  that  1  recommend  in  my 


is  to 
cnm- 
iegal 
This 


\ 


report  as  tax  commissioner  that ~tBe  Mary- 
land Legislature  refuse  hereafter  to  grant 
any  charter  to  any  private  corporation  to 
supply  gas  or  water  within  the  borders  of  our 
Srute.  A  constitutional  amendment  pre- 
venting the  Legislature  from  granting 
any  such  charter  would  be  desirable.  Noth- 
ing could  be  more  calculated  to  prevent  cor- 
ruption and  purify  government,  for  nothing 
has  so  corrupted  and  debased  our  political 
life  as  private  corporations  in  control  of 
natural  monopolies.  We  have  got  so  used  to 
municipal  corruption  that  it  seems  to  us  as 
someihing  inevitable,  but  such  is  not  the 
case.  I  have  lived  for  years  in  cities  in  which 
the  breath  of  suspicion  never  touched  the 
municipal  government, where  corruption  and 
methods  of  avoiding  it  were  not  at  all  ques- 
tions of  the  day,  and  when  the  Hon.  Joseph 
Chamberlain  aadressed  the  students  of  Johns 
Hopkins  University  he  claimed  for  mu- 
nicipal administration  in  Eotrlaud  that  it  was 
above  reproach.  It  is  idle  for  us  to  say  "we 
must  wait  until  we  become  morally  better." 
I  believe  we  are  as  moral  a  people  today  as 
the  English  or  the  Germans.  Our  terrible 
corruption  in  cities  dates  from  the  rise  of 
private  corporations  in  control  of  natural 
monopolies,  and  when  we  abolish  them  we  do 
away  with  the  chief  cause  of  corruption. 

"But  we  must  take  natural  monopolies  out 
of  politics."    It  never  has  been  done,  and  it 
is  an  impossible  thing  to  do— absolutely  im- 
possible.   No  gas  works,  no  water  works,  no 
street-car  lines,    no  steam  railways,  are  so 
thoroughly  in  politics  as  those  in  the  United 
States.    Who  is  so  innocent  as  to  think  our 
great  railway  corporations  "out  of  politics?" 
If  any  one  Is  so  simple  I  advise  him  to  spend 
a  few  weeks  in  tne  present  winter  in  Wash- 
ington or  Annapolis  and  kei-p  his  eyes  amd 
ears  open.    When  I  was  in  Berlin  some  years 
faifo  1  made  a  report  on  Prussian  railroads, 
under  the  direction  of  the  American  minis- 
ter, Hon.  Andrew  D.  White,  for  the  Depart- 
ment of  State  at  Washington.    Every  facility 
was  afforded  me  for  my  Investigation,    and 
my   inquiry    into    the     political     effect   of 
Stat  J     ownership,    which    obtains   in   Ger- 
many,     was     most     careful.      Since     that 
time    I   have  followed  the  development    of 
the  Prussian  policy  with  some  cure,  and  it 
cannot   be   charged  that  I  have  been  influ- 
enced   by   the   government    view,   for    my 
favorite  German  newspaper— the  only    one 
which  I  take— is  bitterly  hostile  to  the  exist- 
ing government.  I  make  bold  to  say  that  to- 
day our  American  railroads  are  incomparably 
more  "in  politics"  than  the  German  railroads. 
Not  only  this,  those  German  railroads  which 
have  been  bought  by  the  state,  I  believe,  are 
less  "in  politics"  than  they  were  when  they 
were  private  property.    Why  this  must  be  so 
will  be  considered  hereafter.    But  the  reader 
must  not    jump  to   the  conclusion    that    I 
am    going     to    advocate    complete     public 
ownership    and  management  of  all  natural 
monopolies    at    the     present    time    in    the 
United      States.       I     am     going     to     do 
nothing  of   the   kind.     However,  I  unhesi- 
tatingly advocate  such  ownership  and  man-, 
agement  for  gas  works,  and  I  challenge  any 
one  to  instance  a  single  American  city— or, 
for  that  matter,any  city, wheresoever  situated 
—which  has  gone  over  to  pnblic  ownership 
and  wnich  regrets  it;  which,  indeed,  has  not 
found  that  a  corrupt  political  influence  was 
thereby  removed  and  political  life  purified 
The    most    unfortunate  city    in    the    world 
with  its  public  gas  works  has  been   Phila- 
delphia, but  when  it  was  proposed  to  sell  the 
gas  works,  and  when  a  ring  bad  "fixed"  the    | 
council,  as  well  as  many  of  the  newspapers, 
there  was  such  an  outbreak  of  popular  in- 
dignation, with  hints  of  the  penitentiary,  that 
the  council  was  terrified  into  doing  its  duty. 
Street  railroads  are  one  of   the  most  im- 
portant natural  monopolies,  and  a  tendency 
for  public  ownership    and   manatrement  is 
beginning     to    become    manifest.      In   the 
United  States,  however,  there   is    but    one 


33 


PL  V  a  ^  is  the  ODo 

whicb  is  operated   In  connection  with   the 
Brooklyn  bridfirc.    Althouah  it  is  said  to  be 
the   best   luauasred    streot    railroad   in  the 
country,    I  am   not    prepared    to   advocate 
public  ownerablp  in  lialtioiore   at   present. 
What  we  want  is  the  New  Orloaos  system, 
and  that  is  what  1  have  recommended  in  my 
report  on  taxation.    It  i3  sale  of  franchise, 
with    reserved    ritfht    to  purctiase   all  the 
property,  that    is,   land,  buildings,    horses, 
cars— in     short,    all     the     plant— Ht   an   ap- 
praised  valuation   at  the   expiration   of    a 
sfiort  period,  s^y  fifteen  years.    In  this,  as  in 
every  case  of  natural  monopoly,  it  should  be 
made  perfectly  clear  that  no  compensation 
ouerht   to   be  srranted  for   compulsory  pur- 
chase*, tfood-will   or   expectation  of   future 
profits.    This  yields  a  large  revenue  to  the 
city  and  leaves  the  people  free  at  the  expira- 
tion of  each  period  to  adopt  any  system  of 
street  railroad  service  which  they  see  fit.    It 
works  very  well   in    New  Orleans,  where  in 
1886  nearly  one-eighth  of  all  municipal  ex- 
penditures was  defrayed  by  the  sale  of  a  sin- 
gle franchise  for  twenty-five  years— the  max- 
imum period  for  which  one  should  ^ver  be 
granted. 

When  the  first  franchise  was  prranted  in 
Baltimore,  in  1859,  the  mayor  of  the  city  ap- 
pears to  have  been  a  man  of  rare  integrity, 
for  through  him  the  right  to  acquire  the 
street  railroads,  at  the  expiration  of  each 
period  of  fifteen  years,  was  reserved  to  the 
city,  and  in  1889  the  city  again  comes  into 
possession  of  a  most  valuable  privilciare.  A 
franchise  which  now  yields  nine  per  cent,  of 
gross  revenues  could  be  sold  probably  for 
twenty-five  per  cent.  In  New  York  city  a 
franchise  has  been  sold  for  forty  per  cent,  of 
gross  revenues,  and  in  Buffalo,  N.  Y.,  half 
the  size  of  Baltimore,  thirty-five  per  cent. 
Was  offered  for  one. 

What  I  should  like  to  see,  however,  is  the 
introduction  of  another  system,  which  is 
hinted  at  in  one  of  our  acts  of  incorporation, 
namely,  a  reduction  of  fares.  There  is  not  a 
shadow  of  a  doubt  that  passengers  could  be 
carried  in  Baltimore  for  three  cents— more 
than  is  charged  in  Berlin,  where  the  compa- 
nies must  keep  the  streets  paved  from  curb 
to  curb,  must  provide  each  passenger  with  a 
seat,  must  in  laying  tracks  have  some  respect 
for  the  rights  of  owners  of  vehicles,  and  do 
a  thousand  and  one  things  which  an  Ameri- 
can corporation  does  not  dream  of, 
to  say  nothing  about  that  fact  that  in 
1911  their  entire  property  reverts  to 
the  city  without  compensation.  The 
report  of  the  tax  commission — and  in  this  re- 
spect there  was  unanimity  of  opinion,  for 
the  other  members  agreed  to  mv  report — 
speaks  of  rendering  proper  methods  of  deal- 
ing with  natural  monopolies  compulsory 
upon  Legislatures  and  municipalities.  The 
people  must  do  this,  for  their  representa- 
tives in  our  days  of  "government  by  special 
interests"  love  corporations  better  than  they 
do  the  people.  It  was  for  a  long  time  sup- 
posed that  the  people  bad  no  rights  which 
anybody  was  bound  to  respect,  and  you  could 
eveu  find  professing  Christians— men  who 
claim  that  they  love  tiieir  neighbors  as 
themselves— bartering  away  for  a  mesa 
of  pottage  the  rights  of  the  public, 
women  and  children,  and  even  unborn 
generations.  Were  Christ  on  earth  I  expect 
He  would  call  them  liars  and  hypocrites. 
However,  imprisonment  of  New  York  city 
aldermen  in  Sing  Sing,  and  the  conviction  of 
Jacob  Sharp,  evf-n  If  it  proved  a  fiasco  in  the 
end,  has  helped  to  clarify  somewhat  the  ideas 
o(  men  with  regard  to  trie  rights  of  the  pub- 
lic. What  ifl  now  needed  is  in  every  city  a 
public  property  defense  league  to  watch  the 
Interests  of  the  public,  and  to  hunt  down  and 
snnd  to  the  penitentiary  those  who  forget 
that  public  offi.e  is  a  piiblio trust. 


PROBLEMS   OF   TOUAY. 


ABOUT     POLICE     FROTECTION. 


WATER- WORKS  AND  ELECTRIC  LIGHTS. 


Monopolies  for  Cities  to  Possess  Ois- 
cusned  by  Professor  Richard  T,  Ely,  of 
Johns  Hopkins  University. 

fWritteu  for  the  Baltimore  Sun.l 

ARTICLE  XXI. 

Reports  of  proceedings  in  the  Legislature 
at  Annapolis  compel  me  to  mention  a  matter 
which  would  naturally  be  treated  In  a  later 
paper.  A  bill  has  already  passed  the  Senate 
providing  for  the  employment  of  special 
policemen  by  corporations  and  firms.  It  U 
very  questionable  to  entrust  even  to  this  ex- 
tent functions  of  government  to  private 
parties.  It  is  a  return  to  the  anarchistic,  dis- 
organized state  of  society  when  the  old  barons 
had  their  retainers  and  engaged  in  warfare  to 
suit  their  special  pleasure.  It  was  generally 
supposed  that  we  had  left  this  barbarism, 
but  there  is  an  unfortunate  tendency  tore- 
turn  to  It  in  the  United  States.  It  is  well  to 
notice  some  thoughtful  remarks  on  occur- 
rences of  the  year  1886,  which  appeared  in  two 
newspapers.  The  Missouri  Republican,  in 
its  issue  for  January  1,  1887,  says:  "The 
past  year  will  be  forever  memorable  as  the 
year  la  which  private  armies  of  mercenary 
soldiers  betran  to  be  established  in  this  coun- 
^j,y^    «    «    *    «    j^  jjgg  ^jeeti  fondly  supposed 

that  Dublio  law  was  strong  enough  to  do  right 
and  maintain  right  between  the   citizens  over 
whom  the  Commonwealth    has  jurisdiction. 
That,  it  now  seems,  waa  an  error.    When  a 
difference  occurs  between  a  great  pork-pucker 
and  his  employes  it  is   not  to  the  State  that 
either  party  has  resort;  and  to  check  appre- 
hended  resistenoe  the   pork-packer   finds  it 
easier  and  perhaps  cheaper  to  call  out  a  regi- 
ment of  hired  soldiers  who  have  been  armed 
and    trained   for  the   service  of  the   hlKhest 
bidtler."  The  New  York  Nation,  in  lis  issue  for 
January  37, 1887,  says:    "It  cannot  be  too  soon 
or  too  well  understood  that,a3  an  armed  organ- 
ization offering  itself  for  hire  for  purposes  of 
defense  in  various  parts  of  the  CTuion,  Pink- 
erton's   men   are,    we   must   all   admit,   the 
jrrcaiest  disgrace  that  has  befallen  the  United 
States.    ♦     ♦     *     ♦     Its  appearance  in  an 
other  civilized  country  would  fill  today  every 
man  in  it   with   shame  and  astonishment," 
More  may  be  said:    It  would  be  impossible 
elsewhere.    It  is  not  clear  what  is  the  inten- 
tion of  those  who  are  behind  this  bill,  but  it 
would  seem  that  it  opens  the  door  to  all  sorts 
of  abuses.  We  In  Maryland  are  quite  capable 
of  maintaining  the  peace  without  the  assist- 
ance of    imported  cutthroats  and    assassins 
from  the  slums  of  other  cities,  and  the  least 
concession     that     can     be     demanded     to 
public    decency    Is    the    Ohio    law,    which 
forbids      the      employment     of     n  on-rcsi- 
dents     aa     special     policetnon     or     deputy 
sheriffs.     In  Ohio  no  one  outside    of    tho 
county   may  be  sworn   in    as  deputy,  and 
In  Baliiraore  no   one   not  a   resident  of   the 
city  should  be  employed  as   a  special  police- 
man.   This  is  the  minimum  concession.   The 
proper  waj^.  It  would  seem,  to  regulate  the 
matter  would  bo  to  have  all  policemen  ap- 
pointed by  public  authorit5%and  allow,  under 
certain  circumstances,    the   employment  of 


I 


w 


i^uiicemeu  oy  private   parties  wiTling-  to  pay 
therefor.    It  is  lo  be  uoticea  that  after  sad 
experience  other  States  are  passinff  laW3  to 
forbid  the  employment  of  non-residents  as 
deputy  sheriffs  or  special  policemen;  and   by 
a  little  forethouKrbt  ia   this   matter  we    can 
prevent  bloodshed   and    bitternesi   belvveen^ 
classes  such  as  we  see  elsewhere.    It  is  to  be 
hoped  that  working-men  and  all  who  have  the 
welfare  of  our  State  and  city  at  heart  will  be- 
stir themselves  in  this  matter  before  it  is  too 
late.    Tiiig  is  one  of   those   cases  whore    em- 
ployment of  homo  labor  Is   the  only  safe 
policy. 

The  next  natural  monopoly  to  be  consid- 
ered  is  water  eupply,  and  comparatively  little 
need   be  said    abo:t  this,  for  the  principles 
whjch  control  it  are  precisely  like  those  uov- 
ernintr  the  sras  supply,  save  that  the  reasons 
for  public  undert  ikinffs  are  still  stronger.    It 
is  more  easily  mana^ea,  and  the  importance 
offreneral  use  of  water   In  larpo  quantities 
cannot  bo  overestimated.    One  of  our  special 
blessings  in  Baltimore  is  our  abundant  sup- 
ply,  and   it  is    questionable     whether   any 
Bpecial  charge  should   be  made  for  its   use 
Certain  It  is  that  the  advantage  of  our  public 
service    over  any  private  service    must   be 
measured  by  millions  of  dollars.  I  have  made 
epicial  iavesiifration  of  water  supply  in  sev- 
eral towns,  and  I  have  yet  to  find  one  Instance 
in     which     municipal     self-help     did     not 
work     better    than    tho     beneficent    patri- 
otism   of     private      corporations.     I    have 
looked    into    the    experience    of  a  whole 
Bfroup  of  towns  In  New  York  State,  and  they 
oil  tell  one  story.  I  have  iK-fore  me  as  I  write 
complete  and  trustworthy  returns  of  two  or 
three  of  these,  procured  with  some  labor  by 
the  exertions  of  friends.    The  exper  ience  of 
Randolph,  in  Cattaraugus  county,  N.  Y.,  tells 
the  story  for  all.    A  private  company  wanted 
to  put  in  water-work  s,  and  the  lowest  bid 

^?>oVi,  ^^""^  "^^^^^  ^'^  ifiducecJ  to  make  was 
?^8,000,  and  that  was  under  condition  that  the 
town  should  subscribe  for  stock.    The  charge 
for  water  was  to  be  $10  for  a  household,  with 
e.vra   faucets,   closets,   &c..   in   proportion. 
Ixanuoloh  finally  built  its  own  works  for  a 
total  cost  of  $20,299  88,  and  with  o  char^fe  of 
%i  for  each  household,  instead  of  $10,  is  mak- 
ing a  profit.    Everybody  I9  delighted  with 
the   experiment.      Gowanda,   in    the    same 
oountv,  has  had  a  similar  experience,  as  havo 
Fredonia     and     Dunkirk,    in     Chautauqua 
county,  while  the  neierhboring-  city  of  James- 
town tried  tho  private  corporation  plan  to  Its 
sorrow.    The  fi-entlemaa  who  sent  me  the  ac- 
count of  the  Randolph  experiment  writes  mo: 
As  to  J;ime9iown  I  have  hoard  nothing  but 
complaints."    As  I  write,  a  gentleman  who 
.has  eqtered  my  office  tells  me  about  the  still 
moro  unfortunate  experience  of  the  people 
.of   (xalesburir,   Illinois,  with  private  water- 
'^orivs.    They  have  been  so  annoyed  by  fall- 
tre  of  the  company  to  fulQll  its  promises, 
aid  by  poroetual  litigation,  that  they  would 
ow     gladly    purchase    the    works,    which 
:ive    been  Idle  for   two  years.    The  plan 
(     privato     companies      is      to    o-et     the 
owns     to     subscribe      for      a     sufficient 

"^"^   of  hydrants    at  a   sufficient    sum 

-■  to  pay  nearly  the  oatire  intere  st  on 

:  outlay,  and  all  the  other  revenues 

ii  clear  profit.    A  trcntleman  who  Is 

'leyforoneof  the  larjfe   companies  en- 

v'   'f^^  suppiyjner  towns  with  water-works 

'Id  me  that  his  skill  had  been  taxed  In  aa- 

* 'hem    to  pump   wat^r  enaugb    Iqto 


and 
to  it 


^ 


tiicu-stocii.  It  had  been  wate: 
asfHin,  and  it  wag  still  necessai 
to  conceal  the  enormous  profits"' 

VVhen  we  take  up  electric  lights,  we  shall 
^''r^I'ZIxT^''''  '°  abandon  tho  principle  of 
local  eeir-uovernment  and  municipal  self- 
help.  No  organization  is  doing  so  much  to 
throw  light  on  these  questions  as  the  Amor? 
can  Economic  Association,  and  no  organiza- 
tion IS  more  deserving  of  the  hearty  sunnort 
of  every  patriotic  American.  One  Jf  it^  mSs? 
useful  publications  will  be  a  monS^rap?  on 
municipal  public  works,  which  is  now  i 
press,  and  from  which  lam  able  to  c-iveafew 
f  .cts  in  advance.  The  Part  on  eleS- dc  IhrhtT 
ang  is  contributed  by  Charles  ^Sore  Sn 
editor  of  the  Detroit'^Even  i^'  News  and^^s 
most  interesting.  Bay  City  Mioh  nnt  in  I 
Plant  in  October,  1886.  arrd7upp  fe'i' lights  fo^ 
i42  each  per  year,  whereas  it  had  been  paying 
a  private  c<  mpany  fluO  per  year.  ^"^'"*f 

Levvistown,   Maine,  owns  its  plant"  sav? 
Mr.  Moore,  "and  by  the  use  of  water  pnwj? 

SLVt^'^nr''«n'^in  ''''^^  ""  ^^  °*^"^s  per  lamp  per 
night,  or  lol  10  per  year.  The  plant  for  100 
t'^J^A^^  ^'ost  114,500;  the  cost  of  Construction 
was  i4oO  per  running  mile.    The  price   paid 

■S22fi'K°°'''*°^''^»  ^^'^°^  ^5  t«  65  cents  for 
hghis  burning  only  till  midniirht.    Now,  at  a 

night?''  "^^"^^^  ^^"^^^  ^^^   ^^^^^   ^^"^^   »i^ 

Madison,  Ind.,  also  appears   to  have  cb- 
taini^d  crood  results  irom  public  works. 

Jrl^unJ't^^^^^^  ^.^y  »r«  these  facts  not 
fnJi  J''^^^  known?  One  reason  is  that  so 
,f.f' J.-'^L^"''"^^,^  newspapers  are  completely 
)?iHL/"'''^^*"^'*°i  *''  corporations,  for  other 
cities  are  not  so  fortunate  as  we  are  in  Bnlti- 

Sl^hH%™°^i^''^'"^u^°'/^°'^*^  of  a  failure    of 
pubhc  works  is  heralded  abroad  to  the  four 
corners  of  ! ho  earth,  while  examples  of  suc- 
crss  are  not  discussed.    Who  talks  about  our 
?^}^\'^^^^  ^'^^  '"'*^^'  ^^ich  was  built  for  less 
than  the  appropriation,  or  the  fine  federal 
Duildiug  put  UD  in  Madison.  Wis.,  for  $12,0u0? 
Ihese  examples  are    not   isolated.    Careful 
inquiry  will  reveal  an  astonishing  number, 
vvnen,  however,  extravagance  and  compara- 
}\ll  ^I'lure  characterize  a  public  enterprise, 
like    the     Capiiol     at     Albany,     we    never 
hear  the  ladt  of  it-as  if  private  enterprise 
were  not  frequently  a  failure!    The  truth  is. 
private    enterprise    generally,  in    its    own 
sphere,    agriculture,    commerce,    manufac- 
tures, goes  far  ahead  of  public  enterprise,  but 
in  Its  own  sphere  public  enterprise  will  in  the 
loofct  run  tro  far  ahead  of  private  undertakings. 
^vLen  wetake  up  railroaiis  wo  again  turn 
Irom   municioai  problems  to  State  aud  fed- 
eral problems,  and  woemer  upon  a  discus- 
sion which,  while  it  is  equally  interesting,  is 
moreuimuultof  ompreiu-nsioii,  for  the  ope- 
rations of  this  natural  monopoly  are  vast  and 
lar-reaching.     Not   only  aro    the  principles 
somewhat  hard  to  understand,  but  the  cor- 
rect practice  among  us  is  not  at  once  diseern- 
ibte,   for  it    must  be  granted  that   federal 
ownership  and  management  of  radroads  is  a 
thmtr  so  far  off   that  ii  does  not  enter  into 
praciical  politics  today.    1  will,  however,  try 
to  make  a  few  principles  clear,  and  to  lay 
down  certain  practical    rules  which  should 
govern  us  in  our  dealings  with  railroads  in 
Day  following  article. 


X 


i^- 


COMri.TlTlUIH    Ui'   KAlIiKOADS. 

]Satural  Monopolies  Further  Considered 
by  Prof.  Kiciiard  T.  Ely,  of  Johns  Hop- 
kins University. 

tWriiteu  for  the  Baltimore  Sun.l 

ARTICLE  XXII. 

Some  years  since  I  was  passlnsr  a  sum  me 
in  a  village  In  Western  New  Tork,  Fredonia 
by  .  The  only  railroad  which  the  Fre- 

(ion _juld  then  use  in  jjfoiDg  to  Buffalo, 

about  forty  miles  distant,  was  the  Lake  Shore 
and  Michi'  iihern,  and  tho  rates,  three 

cents  0  mu .,  e  felt  to  bo  excessive  for  so 

old  and  thickly  settled  a  country.      There 
■was— as  there  still  is— a  Drovision  in  the  char- 
tor  of  tho  old  Lake  Shore  Road  that   fares 
should    bo    reduced    as   soon   as    dividends 
reached  a  certain  point,  which,  of  course, 
ihey   never   have   reached   and   never   will 
reach.    How   the   people   like   to    bo   hum- 
bucraredl    But  at  this  time  a  purallel  railroad, 
the  "Nickel  Plate."  from  Buffalo  to  Chicago, 
was  in  process  of  construction,  and  the  Fre- 
donians  wereenthusiastio  over  the  prospect 
of  cheap  tickets  to  Buffalo.  I  well  remember 
the     exclamation      of      a     lady     on      the 
street  cars,  "Now  we  are  going  to  have  cheap 
tickets  to  Buffalo,"  and  I  can  see   as  if  it  had 
happened'  but  yesterday    the  attorney    for 
the  "Nickel  Plate,"  to  whom  she  was  sneak- 
ing, as  he  beaited  assent  from  his  benevolent 
c»untenance.    Any  one  who  Unew  anything 
about  the  economies  of   railroads,  who  had 
grasped  even  a  few  elementary  facts  about 
natural    monopolies,    could     have   told    the 
people  that  they  were  doomed  to  disappoint- 
ment in  their  hope  of  permanent  relief  from 
the  competition   of  a  parallel  road;  but  the 
illusion  had  taken  such  a  strong  hold  on  them 
that  remonstrance  was  worse  than  useless.   I 
felt  tempted  to  call  in  question  their  predic- 
tions, but  it  is  not  pleasant   to  be  called  a 
crank  or  "mere  theorist,"  so  I  held  my  peace 
and  awaited    developments.    The   road   was 
buiil  and   has    now   become  the    property, 
to    all  intents    and    purposes,  of  tho  Lake 
Shorel    Fares  were  never   reduced.     Single 
tickets  to  Buffalo  are  just  what  they  have 
been  for  years,  and  round-trip  tickets  have 
been  raised  five  cents.    What  earthly  gooi> 
has  been  accomnlished  by  this  parallel  road? 
Doubtless  speculators  and  constructive  com- 
panies put  money  in  their  packets,  but  the 
people  are  poorer  on  account  of  the  enormous 
waste    of     national    resources.      The   fixed 
charges  of  the  Lake   Shore  have  been  in- 
creasied,  its  capital  invested  has  been  aug- 
mented, and   a  reduction,  upon   which  the 
Legislature  could  once  have  insisted,  would 
probably  now  bankrupt  the  road. 

Another  bubble  hurst  about  the  same  time 
and  in  the  same  State.  I  refer  to  the  West 
Shore  Koad,  which  parallels  the  New  York 
Central  and  Hudson  Uiver  Railway.  What 
was  not  that  going  to  accomplish?  As  a 
matter  of  fact  a  railroad  war  did  breakout, 
and  passenger  ticicets  fell  to  one-half  tho 
former  rates  for  a  short  time.  This  was 
war— not  competition- and  tho  West  Shore 
was  beaten,  badly  beaten,  and  lensed  Its  lines 
for  499  years  to  tho  Now  York  Central.  Be- 
fore this  happened,  however,  passinger  faros 
had  been  restored  to  their  old  rates,  and  a 
reduction,  which  would  once  have  been  prac- 
ticable. Is  now  out  of  the  question. 
It  is  estimated  that  the  money  wasted  by 


< 


amounts  to  two  hundred  millions  of  dollars. 
Let  tho  reader  reflect  for  a  moment  on  what 
this  moans.  It  will  be  admittea  that,  taking 
city  and  country  together,  comfortable  homes 
can  bo  constructed  for  an  average  of  $1,000 
each.  Two  hundred  thousand  houses  oould 
bo  constructed  for  the  sum  wasted,  and  two 
hundred  thousand  houses  means  homes  for 
one  million  peoplel  I  suppose  It;  is  a  very 
moderate  estimate  to  place  the  amount 
wasted  in  the  construction  of  useless  rail- 
roads at  a  thousand  millions,  which, 
on  the  basis  of  our  previous  calculations, 
would  construct  homes  for  five  millions 
of  people.  Butthi^  is  probably  altogether  too 
Small  an  estimate  of  even  tho  direct  waste  ro- 
sulting.from  the  application  of  a  faulty  polit- 
ical economy  to  praciical  life.  When  the  in- 
direct losses  are  added,  the  result  is  something 
astounding,  tor  the  expense  of  a  needless 
number  of  trains  and  of  what  would  other- 
wise be  an  excessively  large  permanent  force 
of  employes  must  be  added.  Of  course, 
nothing  much  better  than  guesswork  is  pos- 
sible, but  I  believe  that  the  total  loss  would 
be  suflScient  to  provide  a  greater  portion  of 
the  people  of  the  iJnited  States  with  homes. 

These  is  something  almost  pathetic  in  the 
amazement  and  disapp  lintment  of  the  gen- 
eral public  when  the  Nickel  Plate  and  West 
Shore  were  absorbed,  and  tho  same  thing  %vas 
seen  in  Baltimore  last  fall  when  the  gas  com- 
panies agreed  to  consolidate  and  the  Bilti- 
more  and  Ohio  telegraph  lines  were  acquired 
by  the  Western  Union.  Attempts  to  prevent 
such  consolidation  had  been  made  by  legisla- 
tion. A  purchase  of  the  West  Shore  would 
have  been  illegal,  but  a  lease  for  499 
years  was  not.  The  Baltimore  and  Ohio 
was  required  to  give  bonds  in  Phila- 
delphia, to  be  forfeited  in  case  of  failure 
to  compete.  All  this  was  as  childish  as 
the  anger  of  the  public  on  account  of  these 
various  consolidations.  Competition  is 
foreign  to  the  nature  of  natural  monopolies, 
and  all  the  laws  of  Congress  and  of  State 
Legislatures  to  force  competition  upon  them 
will  be  as  fruitless  in  the  future  as  they  have 
been  in  the  past.  As  well  legislate  that  the 
water  of  all  rivers  shall  flow  up  instead  of 
downl  The  ana-er  of  the  public  on  account 
of  these  consolidations  has  always  reminded 
me  of  the  opposition  of  artisans  and  mechan- 
ics to  the  introduction  of  new  machinery. 
Resistance  is  fruitless,  and  the  only  sensible 
course  is  to  recognize  the  inevitable  and 
malte  the  most  of  it;  and  much  can 
be  made  of  it  by  the  exercise  of  a 
little  common  sense.  Mr.  Vanderbilt  in  ac- 
quiring the  West  Shore  was  as  truly  effecting 
an  improvement  In  the  processes  of  produc- 
tion as  tho  one  who  introduces  improved 
machinery  In  manufactures,  for  he  made  It 
thereby  possible  to  perform  certain  services 
for  the  public  with  a  smaller  expenditure  of 
labor  and  capital  than  would  otherwise  bo 
possible. 

Tho  re  are  certain  phenomena  conne  cted 
with  railroads  in  the  United  States  which  a  t  • 
flrst  aro  likely  to  puzzle  one  who  has  ju3t  be- 
gun to  doubt  the  efBcacy  of  competition  in 
the  field  of  natural  monooolles.  These  are, 
for  the  most  pare,  intimately  associated  with 
tho  fact  thtit  our  railroad  development  is 
still   incoraploto,  and   the  consequencoa  of 


various  policies  are,  therofore,  not  so  clearly 
discernible  as  in  an  older  country.  Probably 
Enjrland  is  the  best  country  for  an  American 
to  study  who  desires  to  see  the  legitimate 
effects  of  competition,  for  Enjfland  started 
out  with  our  theory  of  private  competition, 
and  under  its  influence  two  natural  monopo- 
lies—the  telearraph  and  the  railroad— w'ere 
fully  developed.  I  say  developed,  because 
little  remains  to  be  done  in  either  direction. 
A  few  minor  extensions  may  be  made,  and  a 
few  branch  roads  constructed,  but 
the  general  features  are  complete.  First, 
just  one  word  about  the  teletrraph  policy  of 
England.  Eupland  tried  to  force  competition, 
and  this  was  the  result.  Her  telei?raph 
system  %ost  her  nearly  as  much  as  all 
the  other  teleerraph  systems  of  Europe  put 
tosreiher,  for  the  e«tioiated  cost  of  the  Eupr- 
lish  telegraph  Is  273.000.000  of  frsftics,  and  of 
all  the  other  telegraphs  of  Europe  put  to- 
cher only  2&5,ua),000  of  francs.  Probably 
..t'  best  work  on  EnwLsh  railroads  is  that  by 
Prof.  Gustav  Cohn,  and  in  this  it  is  shown 
that  the  ultimate  effects  of  competition  in 
every  case  haye  been  higher  charires. 

It  is   said   that   rates  have   fallen   in  the 
United  States.  This  is  true:  bur  has  the  cause 
been    competition?     Competition     has    un- 
doubted! v    brou^tit   about    a    reduction   in 
some  cases  sooner  than  it  would  otherwise 
have  happened,  but  as  the  country  developed 
.ji  and  became  thickly  populated  it  was  natural 
I  forra'esto  fall.    Tbo  principles  which  con- 
trol monopoly  charares   are   simple.    A  man 
who  ha?a  complete  monopoly  will  fix  prices 
at   that  point  which  will  yield    largest    net 
retun  9,  and  up  to  a   certain  point  he  will 
steadily  reduce   charges,  as   he  thereby  in- 
creases business  and  trains  a  larger  total  not 
revenue.      The    most    striking    instance    is 
given     by    the    history    o£    the    postofljoe 
throughout     the     civilized     world.     A    re- 
duction  of   ov'T  fifty  per  cent,   in  charges 
hae     ultimately     lucrea>od     net    revenues. 
Another  Illustration  is  Riven  by  the  Stand- 
ard   Oil    monopoly.      Newspaper   organs   of 
monopoly  tell  us  to  admire  thu  mni^nanlmity 
of  the  Standard  Oil  people,  who  have  reduced 
prices.    This   is   a   false   statement.     Prices 
liave  fallen  in  spite  of  their  most  strenuous 
efforts  to  keep  them  up,  and  this  a?aln  illus- 
(i-ates  the  importance  of  political  economy  as 
//study  for  common  schools.    It  is  possible  to 
ihay  such  absurd  things  In  regard  to  the  price 
'of  oil  simply  on  account  of  the  dense  popu- 
lar ignorance  about  those  forces  which  make 
PBicos  what  they  are.    The  production  of  oil 
has  increased  enormously,  and  those  amontr 
my  readers  who  are  acquainted  with  theStand- 
ard  Oil    men  will  probably  have  heard  them 
lament  this.    Now  if   they  raised  prices  or 
maintained  them,  they  wouM   be  obliged  to 
keep  their    oil   and    waste    it.     They    have 
alwaysheldback  vaatquantitiesof  oil  to  main- 
tain prici  8,  and  rumors  reach  us  of  a  deter- 
mined effort    to   diminish    productioi};   but 
nevertheless  it  has  been  necesj^ary  to  lower 
prices  time  and  time  again  to  work  off   the 
quantity  on  hand.    Prices  must  be  lowered  in 
order  to  increase  demand  for  the  commodity. 
Apply  this  to  railroads.    They  have  enor- 
mons  fixed  charges  which  are  entirely  inde- 
pendent of  the  business  they   do,  and   the 
greater  their  business  the  more  active  use 
they  make  of  their  capital.    In  proportion  as 
a  road  is  not  used  to  its  utmost  capacity,  its 
capral  is  idle.  Now,to  helpbuild  up  the  coun- 
try and  supply  themselves  with  business,  it 
has  been  necessary  for  our  railroads  to  re- 
duce charges,  otherwise  they  could  not  get 
the  business  which  they  needed.    A  portion 
of  their  business  would  simply  not  exist  were 
it  not  for  lower  charges  than  those  of  earlier 
days.    This  tendency  to  lower  pticas  stops  in 
tit!  case  of  private  monopolies  at  precisely 
that  point  where  increased  business  Is  not  at- 
tended with  increased  net  profits.    One  point 
to  be  observed  is.tljis:  Legislatures  have  a 
control  over  rates?  and  could  in  many  cases 
l.uver  them  materially,  had  not  the  wastes 
petition  ^^xpenses  of   the  ruil- 


roaus.  st3cond,it  m ust Be  remembered  that  th"e 
number  of  even  nominally  competitive  points 
is  and  ever  must  remain  sma;l.  Accordmjf 
to  the  chief  of  the  bureau  of  aiatisiics,  there 
were  January  1,  1887,3:3.694  railroad  stations 
in  the  United  States,  and  of  these  only  3  778 
were  junction  points,  and  many  of  these 
junction  points,  t.  e.,  places  having  more  than 
one  road,  were  on  railroads  which  had  no 
terminus  in  common. 

More  important  is  the  real  competition  of 
natural  water  routes,  Which  sometimes  exists, 
though  there  is  a  determined  effort  to  crush 
it  out.  Last  summer,  at  Chautauqua.  I  wit- 
nessed a  typical  instance.  The  Chautauqua 
Lake  Railroad  bought  every  line  of  steamers 
on  the  lake.  Artificial  waterways,  namely, 
canals,  are  also  important  where  the  people 
of  a  State  have  had  the  good  sense  to  retain 
and  improve  them.  This  has  happened  In 
New  1  ork  fctate,  which  now  proposes  to  spend 
a  million  on  the  Erie  canal.  This  Erie  canal 
has  helped  to  make  Now  York  the  powerful 
Empire  State  she  is,  and  its  maintenance  wus 
due  to  the  democratic  statesman,  Horatio 
Seymour. 

A  few  years  ago  New  York  was  bound  hand 
and  foot  like  Maryland  by  a  senseless,  iron- 
clad constitution,  which  threatened  to  hand 
her  over  to  the  clutches  of  the  corporations, 
but  Horatio  Seymour  aroused  the  people, 
'^"t  the  State  constitution  amended  and, 
abolishing  tolls,  made  the  Erie  canal  a/ree 
waterway.  A  further  consideration  of  rail- 
roads will  lead  us  back  to  the  subject  of 
federal  financiering,  after  we  have  touched 
1  upon  several  other  Important  topica. 

The  Pendins  Problem  in  Maryland  DIs 
cussed    by   Prof.    Richard    T.   Ely,    of 
JohnA  Hopkins  University. 

LWrltten  for  the  Baltimore  Sun.l 

ARTICLK  XXIII. 

I  suppose  nothing  is  more  thoroughly  a 
problem  of  today  with  us  in  Maryland  than 
the  fate  of  the  Chesapeake  and  Ohio  canal. 
The  subject  has  been  muoh  discussed,  but 
the  discussion  has  not  been  of  a  nature  to 
inspire  the  patriot  with  enthusiasm  for  the 
future  of  his  country.  There  has  been  suoh 
an  absence  of  any  clearly  defined  purpose, 
of  any  manifestation  of  enlightened  views  in 
regard  to  the  various  means  of  communica- 
tion and  transportation  and  their  relations  to 
one  another,  such  an  utter  lack  of  large  and 
generous  statesmanship,  that  one  is  reminded 
of  the  expression  "peanut  politics"  rather 
than  of  the  activity  of  those  two  democratic 
leaders,  Horatio  Seymour  and  the  earlier  and 
still  greater  DeWitt  Clinton,  whose  names 
stand  out  so  prominently  in  the  history  of 
canals  in  the  United  States.  There  are  a  few 
points  in  regard  to  canals  in  general  which 
should  be  carefully  considered  before  action 
Is  taken. 

It  is  commonly  said  that  the  day  of  canals 
la  past.  Thi3  is  only  a  little  less  rai  ional  than 
to  gay  that  the  day  of  the  ordinary  highways 
Is  past,  because  we  have  the  steam  railroad. 
Each  means  of  communication  has  its  own 
use,  and  the  office  of  each  is  not  to  displace 
the  others,  but  to  supplement  the  others. 

It  was  a  misfortune  for  us  that  we  began  to 
neglectour  public  roads  when  the  era  of  rapid 
railroad  construction  began,  and  in  this  one 
respect  at  least  It  would  have  been  a  blessing 
for  the  United  States  had  the  age  of  railroads 
been  somewhat  delayed.  A  distinguished 
American,  who  has  recently  passed  some 
time  in  Baltimore,  said  that  our  public  roads 
In  the  United  States  wore  the  poorest 
which  existed  in  any  civilized  country,  so 
far  as  he  had  observed,  and  he  has  traveled 
extensively.   The  loss  which  this  entails  upon 


1 


tJieasrioultural  community  and  theTsottima-  i 
nity  at  lareo  l3  onormous.    It  reqnirps  more  ? 
horse  power  to  pull  a  iriven  load  a  jriven  dls-  ( 
tance,  and  the  waste  resulilnor  from  the  wear  , 
and  tear  of  ivaffons  and  vehicles  every  year 
must  amount  to  many  millions  of  dollars.    It 
was  estimated  some  years  afro  that  improved 
-     -  mentsin   Berlin  would  save  owners  of 
s  on  nn  avoraffe  for  each  horse  consid- 
erabiv  over  $25.    There  are  over  ten  millions 
of  horses  In  the  United  States,  and  if  to  be 
quite  within  bounds   we  place  the   annual 
Bavin?  which  would  result  from   flrst-class 
roads     throujrhout     the     country     at     $10 
per     horse,    it     would     amount     to     over 
one    hundred    millions    of     dollars,    which 
is  interest  on  two  billions.    This  is  probably 
moderate,  for  in  cities  like   Baltimore  flrst- 
class  streets  In  which  onlv  proper  street-oar 
rails  were  allowed  would  save  easily  $35  per 
horse,  and  the  farmers  will  bear  me  out,  I  am 
confldenr,  when  I  say  that  in  this  part  of  the 
United  States,  at  least,  «15  per  horse  is  a  very 
low  estimate  for  the  annual  saving   which 
would   result   from   excellent    roads.      The 
Bavinj?  to  vehicles  and  to  harness  must  he 
added  to  the  saving  of  horseflesh,  and  when 
It  18  remembered  that  with  erood  roads  one 
horse  would  often  suffice  where  two  are  now 
necessary,  and  always  two  where  three  are 
nowrequired,  it  will  be  admitted  that  fSO  a 
horse  is  not  an  extravagant  estimate  for  the 
i  country.      However,    contentintr    ourselves 
I  with  the  low  estimate  of  one  hundred  mil- 
^   lions     per     annum,    which      is     equal     to 
f    interest      ou     two     billions      of     dollars, 
it     will      be      seen      how     serious       our 
loss  in    neglecting  adequate  provision    for 
highways.    The  great  French  reformer.  Tur- 
got,  who  did  so  much  for  the  province  of 
which  he   was  governor,  elevating  it  from 
the  condition  of  one  of  the  poorest  to  one  of 
the  wealthiest  provinces  in  France,  turned 
his  attention  first  of  all  to  the  ordinary  public 
roads,  and  demonstrated  by  just  such  calcu- 
lations the  advantacre  of  first-class  highways. 
There  can  be  no  doubt  that  the  excellent 
roads    he   constructed   were  one  important 
{cause  of  the  prosperity  of  Limoges. 
-  '     Now,  as  we  have  neglected  public  roads,  so 
we  are  also  overlooking  the  importance  of 
canals,  and  the  result  is  in  many  ways  more 
serious,  for  we  can  go  to  work  the  moment 
we  will  and  Improve  our  roads,  but  the  value 
of  vast  expenditures  is  forever  lost  by  a  falao 
policy    with    respect    to   canals.      England 
allowed  her  canals  to  fall  into  the  hands  of 
the  railroad  corporations,  and  It  is  now  as 
live  a  question  there  to  know  how  to  get  them 
"out  of  the  clutches  of  the  corporations"  and 
restore  them  to  their  proper  uses,  as  with  us 
to  know  how  to  take    certain  great  work^ 
"out  of   politics,"  all  of  which  proves  that 
1  there  is  no  "royaUroad"  to  good  admlnistra- 
Itlon,   and  least   of   all  by  reducing   govern- 
ment to  insignificance.    However,  Ii  seems 
Ifonerally   to    bo    agreed   in   England    that 
the  conclusion   that  the  era  of  canaU  had 
gone  was  over-hasty,  and  Eocrland    proposes 
,  row   to  spend  millions   on  canals.     France 
finds  Its  its  canals  still  useful,  and  they  art) 
able  to  carry  largo  classes  of  freight  for  two- 
thirds  what   it   coats    by  rail.    Germany,  al- 
( thouffh  the  various  German  States  own  the 
railroad,   contemplates   extensive    Improve- 
meutft^ln  canals.    Why?    B  oauso  what  wo 


want  in  our  nationni  industrial  life  is  lo  ac- 
complish our  ends  with  the  smallest  expendi- 
ture of  labor  and  capital,  and  this  purpose 
is  attained  by  giving  the  canals  a  place  in  the 
various  means  of  communication  and  trans- 
portation. 

American  States  offer  ua  valuable  testimony 
from  experience  as  well  as  these  foreign 
countries.  It  is  instructive  even  now  to  go 
back  to  the  construction  of  the  Erie  canal- 
finished  In  J82o— and  examine  the  circum- 
stances under  which  the  undertaking  was 
brought  to  a  successful  termination. 

Politicians  are  of  two  classes— those  who 
subserve  special  interests,  and  thi^  renew 
day  by  day  their  life  of  deception,  fraud  and 
perjury,  for  In  their  oath  of  ofilcetbey  have 
called  Almighty  God  to   witness   that  they 
will  not  do  that  very  thing— and  those  whoso 
acts  substrintiate  their  professions  of  dev.o-^ 
tion  to  general  and  public  interests.    It  is 
rather  discouraging  that  under  the  influende 
of  a  high  protective  tariff  and  corporations 
imanaifing    natural    monopolies,    politicians 
of    the     former    class    have    gained     such 
an     ascendency     that     all      our      various 
governments     have    become    so     depraved 
that     the      term      "government     by     spe- 
cial   interests"     la     applicable     to     them. 
DeWitt   Clinton,    however,  was  a  man  who 
was  always  askine  himself.  What  can  I  do  to 
promote   the   general   welfare,   and   he   ac- 
quired a  habit  of  looking  at  measures  from 
that  lar^e  and  patriotic  standpoint.    Thus  it 
was    that    he    pushed    through    his   canal 
project  against  great  opposition.    And  what 
was  the  nature  of  this  opposition?    Such  as 
always   attends    public    improvements.      It 
•was  a  "visionary"  scheme,  as  a  public  under- 
taking it  could  not  succeed,  and  the  like,  nnd 
it  was  called   "Clinton's  Bi?   Ditch."    How- 
ever, it  was  finished,  and  if  our  politicians 
could  be  induced  to  give  somo   attention   to 
DaWitt  Clinton's  life  and  writings,  it  would 
be     most     fortunate.      This      Erie     canal 
has      probably      done      more      for     New 
York    State   and   city   than  any  other  one 
public  enterprise,  and  today  it  is  a  powerful 
factot  in   determining  freight  rates  all  over 
the  Union.    It  was  in  1883  that  the  canal  was 
imperiled  by  an  iron-clad  State  constitution, 
and  then  it  was  that  Horatio  Seymour  came 
to   the  rescue   and  brought  about  changes 
making  it  a  free  water-way.    Asainst  what 
senseless  opposition  did  he  not  have  to  con- 
tend also?    Perhaps  not  so  much  » senseless 
ODposition,  however,  for  these  vei  j'  railroads 
which  claim  that  the  day  of  canals  Is   past 
some  way  seemed  to  be  very  anxious  to  kill 
this  useless  Institution,  as  they  called  it.    The 
question  naturally  arises,  li"  canals  are  of  no 
use  why  do  railroads  dread  them  and  goto 
the  expense  of  buying  them  and  filling  them 
up?    Why  not  let  them  die  a  natural  death? 

But  all  the  corporations  in  the  world  could 
not  govern  the  people  were  it  not  for  their 
i  own  apathy,  indifference,  narrowness,  selflsh- 
I  ness   and  apparent  desire  to    be    saddled, 
^  bridled  and  ridden.    Our  fate  rests  with  our- 
selves.   There  was  an  attempt  to  array  the 
j  people  of  one  part  of  the  State  against  an- 
lother.    Especially   did    opposition    manifest 
Itself  in  those  counties  not  adjacent  to  the 
canal,  and  the  railroad   organs  suddenly  dis- 
played an  unwonted  affection  for  the  poor 
farmers  wh^  —o—.  to  be  'taxed  to  support. a 


caiml  in  whioH  they  had'n^Ihteresta;   Hora- 
tio Seymour  demonstrated  rhat  the  canal  had 
so  increased  ttio  taxable  baeia  of  the  State 
that  the   tax  rate  was  lower  than  would  oth- 
erwise bo  possible.    All  had  thus  trained,  and 
no  one  lost  a  penny.    Ho  also  rebuked  the 
petty  spirit  which   could    imagine   that  the 
intereeta     of     all     parts     of     the     State 
wero   not  harmonious.    "The   spirit   which 
prompts  opposition  to  the  amendment,"  said 
Seymour,  '-is  best  expressed  by  words  which 
import  that  if  tbe  counties  which  desire  free 
cana'iS,  wish  to  have  them  made  so.  let  tbem 
,pay  the  cost.    If  this  f eelimr  Is  made  mani- 
fest, to  what  end  will  it  lead?    It  will,"  he 
said  in  return,   if    such  counties   wish    to 
have  their  schools  supported,  'let  them  pay 
the  costs;'  If  ihey  desire  that  their  members 
of  the  Lefirislature  or  their  judiciary  should 
receive   their  salaries    let    them    pay   the 
costsi     This   will   throw   upon   such  coun- 
ties    a     great     sum    of     taxation,     many 
times  more  in  amount  than  tbeir  share  ot 
makinpr  free  canals.    I  deplore  a  result  which 
would  go  80  far  to  impair  the  honor  and  in- 
teresti  of  New  York.    I  should  regret  the 
defeat  of   the   amendment,  because  if  it  is 
adopted  it  will  lessen  taxation  upon  all  sec- 
tions and  pursuits.    Canals  are  the  routes 
most  needed  by  our  farmers  and  mechanics. 
Every  dollar  of  tax  or  tolls  lilted  off  of  their 
commerce  adds  to  the  value  of   their  pro- 
ducts and  lessons  the  charges  they  have  to 
pay  to  get  them  to  market." 
_  Hon.  O.  B.  Potter,  of  Nevy_  York,  "who_  Is 
now  IntereltlnBr  himsel  f  In  favor  or  the  nsIF 
lion-dollar  appropriation   for  the  Improve- 
ment of  the  Erie  canal,  said  in  an  argument 
before  the  joint  committee  of  the  Senate  and 
Assembly  in  February  2. 1886.  "However  im- 
portant and  beneficial  the  railways,   now  or 
hereafter,   they.will  never  supersede  the  ne- 
cessity for  or  the  usefulness  of  these  canals," 
and  speaking  of  projects  for,  canals   in  other 
States  he  said:    "There  is  not  one   of  them 
that  will  not  repay  the  State  in  which   it  is 
located,  and  of  the;  wealth  of  {which,  when 
done.  It  forms  a  part  mar.yfold." 

With  what  truth  it  is  said  that  canals  pan 
do  nothing  is  seen  in  the  fact  that  the  canals 
alone  brought  to  New  York  city  last  May, 
June  and  July  (to  the  23i)  over  two  millions 
more  bushels  of  grain  than  the  total  amount 
received  ai:.  Boston,  Baltimore  and  Philadel- 
phia. Horatio  Seymour,  Jr.,  in  a  pamphlet 
entitled  "The  Canal  Age,"  and  dated  March 
33,  1886,  undertakes  to  show  that  railroads 
cannot  transport  so  cheaply  as  canals, 

A  few  facts  must  be  borne  in  mind.  One  ts 
the  day  for  canals  owned  by  private  corpor- 
ations has  passed,  and  that  for  two  reasons. 
The  first  Is  that  the  gain  of  canals  is  of  a  pub- 
lic nature,  rather  than  individual.  There 
always  have  been  public  works  which  would 
not  remunerate  an  individual,  and  yet  are  of 
the  greatest  advantage  to  the  people  at  large. 
The  streets  of  a  city  like  Baltimore  are  an 
example.  Should  we  try  to  derive  a  direct 
revenue  from  our  streets  we  would  ruin  the 
city  and  grass  would  grow  on  Baltimore  and 
Charles  streets.  These  undertakings,  which 
are  only  indirectly  remunerative,  are  often 
most  profit  able.  The  second  is  that  private 
parties  sellout  to  the  railroads,  and  all  agree- 
ments and  contracts  to  do  otherwise  are  not 
worth  the  paper  on  which  they  are  written. 


Should  the  C.  and  O.  be  retained  alFhope  ot" 
direct  profit  ought  to  be  abandoned.  It  haS 
been  suggested  that  the  canal  be  extended  to 
Baltimore.  Whether  this  is  wise  or  not  I  do  not 
know.  It  would  require  the  opinion  of  those 
better  acquainted  with  the  cost  of  oonstruc- 
tloa  and  with  the  advantages  of  cheap  com- 
munication to  Washington  and  then  by  canal 
to  the  coal  regions  to  decide.  However,  the 
advantage  to  the  State  in  the  canal  can  only 
be  of  an  indirect  nature  in  extending  its  busi- 
ness and  in  reducing  the  prices  of  commodities 
to  consumers.  It  must  be  expected  to  keep  it 
up  at  an  annual  outlay,  as  other  public  enter- 
prises are  maintained.This  was  what  NewYork 
deliberately  resolved  to  do.  Inamass-meetinar 
in  Cooper  Union,  in  New  York  city,  it  was 
was  said,  "We  have  a'oew  school  of  narrow- 
ness that  wants  to  choke  the  canals  because 
they  do  not  earn  enough  to  support  them- 
selves, but  they  earn  enoueh  to  support  or 
help  support  the  millions  of  people  that 
live  in  this  State."  It  is  noteworthy 
thHt  Pennsylvanians  regret  their  short- 
sighted policy  in  selling  their  canals. 
The  Philadelphia  Record  said  last  year 
on  this  subject:"  While  other  States 
were  disposing  of  their  public  works  and 
artiflclal  waterways.  New  York  retained 
possession  of  the  Erie  Canal.  *  ♦  Every 
wage-worker  and  small  consumer,  East  and 
West,  is  a  crainer  by  It.  *  *  *  The  State 
of  Pennsylvania  transferred  its  public  works 
to  a  railroad  corporation  thirty-eight  years 
ai?o,  and  today  nearly  all  thy  canals  in  the 
Stat?  are  useless.  The  Pennsylvania  Rail- 
road applies  to  the  Legislature  every  session 
to  abandon  an  additional  section  of  the  canal 
system,  which  it  obtained  under  a  pledge  to 
maintain  forever." 

It  is  to  be  noticed  further  that  It  seems  to 
be  awepted  that  the  more  extensive  a  canal 
system  is  the  greater  its  relative  advantacres. 
A  email  strip  of  canal  by  itself  may  be  worth 
little,  but  when  part  of  a  larger  system  it 
may  be  invaluable.  Further,  it  is  the  opinion 
of  those  best  qualified  to  speak,  that  no  fed- 
eral assistance  for  the  Erie  canal  is  desired, 
j  because  that  would  Involve  federal  Interfer- 
ence. The  Union  for  the  Improvement  of 
Canal?!  In  New  York  Is  strongly  opposed  to 
federal  aid. 

Finally,  nothing  can  be  gAned  by  a  tempo- 
rary and  uncertain  policy  with  reference  to 
canals.  It  is  proposed  to  give  the  Chesapeake 
and  Ohio  a  trial  for  two  years  still!  Can 
anything  more  futile  be  imagined?  It  cannot 
be  utilized  until  people  know  what  to  expect. 
Who  will  build  new  boats  and  encrage  In 
canal  business  while  this  uncertainty  lasts? 
The  experience  of  Ohio  is  Instructive.  As 
soon  as  it  was  decided. to  retain  the  canals  as 
the  property  of  the  State  basiness  began  to 
improve.  The  Ohio  board  of  public  works 
reported  a  gain  of  over  $30,000  in  the  income 
from  canals  for  1886,  and  that  was  attributed 
to  the  hope  that  the  canals  were  not  to  "be 
abandoned  or  allowed  to  fall  into  decay  and 
disuse."  The  Governor  of  Ohio  says:  "They 
constitute  a  valuable  public  property.  The 
State  should    not    dispose  of  any  part  of  | 

them." 
The  "two-year  trial"  scheme  is  predestined  j 


to  failure,  and  the  canal  mightas  well  be  sold 
at  once.  If  that  Is  not  already  clear,  it  I.s  to 
be  hoped  that  the  quotation  f  r«m  Horatio  Sey- 


/ 


mour  about   the*  Erfe    ^ ...  ...„  w fit  bo 

auflacieot*  "This  hostile  and  monacin?  atti- 
tude of  our  State  toward  canals  and  boatmen 
prevents  the  bulldiner  of  vessels  and  their 
use.  It  has  lessened  the  receipts  for  tolls, 
fur  men  will  not  ea(ras?o  In  a  business  where 
they  are  liable  to  be  ruined  by  an  accident 
or  by  the  design*  of  rich  competitors.  These 
will  find  it  profltable  to  carry  for  losinnr  rates 
foroneyear  If  tboy  can  destroy  forever  the 
boatmen  or  the  canals  which  keeodown  their 
own  rates  for  carryinpr  the  products  of  our 
own  people.  When  they  have  destroyed 
their  competition  they  can  ever  after  put  up 
their  own  chars-es  to  suit  their  own  interest." 

THE  FUTURE  OF  BALTIMORE. 


The  Forces  Productive  of  Municipal 
Greatness  Discussed  by  Prof.  Riclxard  T. 
Ely,  of  Johns  Hopkins  University. 

rWritton  for  the  Baltimore  Sun.l 
ARTICLE  XXIV. 

The  articles  which  have  appeared  in  The 
Sun  on  openings  in  Baltimore  for  business 
men  have  very  naturally  attracted  a  good 
deal  of  attention  and  awakened  a  spirit  of 
hopefulness  and  enterprise.  Who  can  set 
any  limit  to  the  possible  future  develop- 
ments of  our  favored  city?  President  Oilman, 
in  his  address  before  the  Johns  Hopkins 
University  on  the  23d  Instant,  showed  what 
had  been  done  in  a  very  short  time  to  elevate 
Baltimore  in  all  those  things  which  go  to 
make  up  a  hisrh  civilization,  and  hinted  at  a 
possible  future  growth  of  the  city  in  remind- 
ing the  audience  that  London,  with  all  Its 
millions  of  people,  was  at  the  beginning  of 
the  century  but  a  little  larger  than  Baltimore 
at  the  present  time.  It  has  always  been  a 
favorite  theory  of  mine  that  in  Baltimore 
there  are  opportunities  for  the  unfolding  of  a 
fuller  and  richer  civilization  than  tne  new 
world  has  yet  seen;not  only  that.but  that  there 
are  opportunities  here  which  exist  nowhere 
else.  This  opinion  has  not  been  carelessly 
formed,  but  is  the  result  of  careful  reflection 
upon  the  nature  of  the  various  elements 
which  are  working  together  to  promote  the 
advancement  of  Baltimore.  Baltimore  is  situ- 
ated on  the  border  line  between  North  and 
South,  and  here  are  brought  together  the 
peculiar  excellences  of  each  section,  and 
here  they  will  blond  together  indistinguish- 
ably  In  our  municipal  life.  The  charm  of 
Southern  social  life,  the  high  social  culture 
which  distinguishes  the  South,  will  be  sup- 
plemented by  the  Indomitable  push  and 
energy  of  the  hardy  sons  of  New  England. 
Music,  paintinc",  literature,  fand  learning  in 
ail  Its  various  branches,  are  progressing 
favorably,  while  the  economic  basis  of  a  high 
modern  civilization  is  found  In  an  expand- 
ing Industrial  life,  as  seen  in  our  growing 
commerce  and  enlargini;  manufactures. 

One  thing  to  be  borne  in  mind  In  refleotions 
upon  our  future  is  that  modern  cities  are  to 
an  unprecedented  extent  artificial  products, 
the  work  of  men's  genius  and  energy.  For- 
merly nature  decided  wh^re  a  great  city  could 
grow  up,  and  a  hitfh  civilization  was  possible 
only  on  the  seacoast  or  on  the  banks  of  great 
river?.  Now  man  has  subjugated  nature  to 
such  an  extent  that  bo  is,  comparatively 
speaking,  independent  of  her  whim  and 
caprice.  If  natural  water-ways  fail,  ho  may 
construct  artificial  wator-ways,and  even  with- 
out the  aid  of  navigation   at  all  a  city  may 


spring  up  In  the  heart  ofacbntioentT  Beirlin, 
nearly  the  size  of  New  York,  is  in  the  centre 
of  a  great  open  plain  on  the  continent  of 
Europe,  and  may  bo  regarded  as  a  work  of 
art.  Only  by  canals  can  navigable  rivers  be 
reached,  while  the  modern  iron  highway,  the 
railroad,  still  more  an  artificial  product,  is  a 
far  more  important  element  in  developing 
Berlin,  which  has  become  an  important  rail- 
road centre.  It  is  the  will  of  man  which  has 
made  Berlin  more  important  than  the  sea- 
ports Bremen  and  Hamburg. 

Perhaps  a  better  illustration  can  be  foutid 
in  two  small  cities  in  Western  ivow  York- 
Dunkirk  and  Jamestown.  Dunkirk  is  a  port 
on  Lake  Erie,  and  is  advantageously  situated 
in  a  fruitful  plain,  extending  along  the  shores 
of  the  lake.  Jamestown,  on  tho  other  hand, 
is  O'j  the  top  of  the  Chautauqua  hills,  and  its 
onlv  naviirable  body  of  water  is  Chautauqua 
lake,  scarcely  more  than  a  great  pond.  The 
next  most  important  place  on  the  lake  is 
Mayvilie,  a  village  with  perhaps  ten  or  fif- 
teen hundred  inhabitants.  Who  would  sup- 
pose that  Jamestown  would  leave  Dunkirk, 
its  rival,  and  otice  its  superior,  far  in  the  rear 
in  the  race  for  supremacy  in  Chautauqua 
county?  Yet  such  has  been  the  case, 
and  Jamestown  will  probably  soon  be 
twice  the  size  of  Dunkirk.  Now,  more 
or  less  acquainted  with  both  cities,  I  am 
unable  to  find  any  other  explanation 
for  this  than  tho  greater  energy  and  en- 
terprise of  the  people  of  Jamestown.  James- 
town is,  in  other  words,  an  artificial  product. 
Two  of  the  chief  disadvantaijes  of  Jamestown 
which  the  people  see— tor  they  have  tried  to 
correct  them,  and  have  been  defeated  by  con- 
stitutional quibbles— are  their  dependence  on 
private  gas  and  water  companies,  for  in  these 
respects  they  allowed  things  to  take  their  own 
course,  and  did  not  keep  in  their  own  hands 
control  of  two  of  the  essential  elements  of 
progress. 

The  application  is  suflScieDtly  obvious.    Na- 
ture has  blessed  us  and  done  more  for  us  than 

for  some  other  great  cities.     These  advan- 

tatres  are  not  to  be  despised,  but  they  cannot 

be  relied  upon.    It  rests  with  us  to  say  what 

the  future  shall  be.    If  we,  the  people  of  Bal- 

timc^re,  WILL  it,  we  can  make  Baltimore  as 

big  as  London.    Not  only  that;  we  can  make 

Baltimore  a  happier,  bettor  and  more  truly 

civilized  city  than  London  today  with  all  its 

squalor  and  misery. 

When  the  question  Is  asked.  How  shall  we 
outstrip  our  rivals  In  true  trroatness?  it  will 
be  at  once  seen  that  all  the  previous  papers 
In  this  series  have  a  bearing  on  tho  answer. 
It  is  now  proposed  to  stop  and  apply  some  of 
the  principles  which  have  already  been  de- 
veloped. 

Those  humnn  forces  which  produce  na- 
tional or  municipal  greatness  may  be  divided 
into  two  classes.  The  first  are  individual; 
the  second  may  be  crtlled  social.  The  indi- 
vidual forces  are  so  obvious  and  have  been 
80  often  elaborated  in  an  age  characterized  by 
excessive  individualism  that  it  is  not  worih 
while  to  dwojl  long  on  them.  The  Importance 
to  each  citizen  and  to  the  community  of  in- 
dividual temperance,  thrift,  intelligence  and 
energy  cannot  be  overestimated.  Nothing 
can  be  done  without  Individual  excel- 
lence. A  mistake  Is  otily  made  when  it 
is  •supposed  that  individual  superiority 
alone  Is  suflQclent.  The  Individual  by 
himself    is     powerless.       Wealth     is    only 


h^ 


possible       in      4      oommunit,,     „ud       m 
this  community  no  (one  livo3  for'  himself 
alone.    Can  art  flourish  where  hut  one  loves 
art?    On  the  contrary,    the   artist   must    be 
stimulated  by  a  public  which  appreciates  and 
encouraues   art,   and,    other    things    belntr 
equal,  the  more  widely  diffused  the  love  and 
knowleaee   of    arc  among-    the   people   the 
higher  the  excellence  wnich   artists  will  at- 
tain.   What  hope  is   there   Tor  architecture 
among  a  people  who  prefer   the  cheap  and 
R-audy  to  the  eternal  beauty  of  sublime  and 
simple   creations?     What    hope    for    music 
amonar  those  who  turn  away  from   the  great -^ 
masters  to  applaud   the   rattlinir   waitz   of  a 
fifth-class  composer?    What  hope  for  litera- 
ture where  there  are  none  to    prefer  Gaorse 
Elior,  Thackeray  and  Dickens  to  Ouida,  Miss 
Braddon  and  Huj?h    Conway?    Ic  "Is    readily 
admitted  by  all   who   know   what  they   are 
talking:  about  that  iu  all  these   pursuits  the 
social  atmosphere   is   of   vital   Importance. 
It  is  likewise   in    business.     What  does  the-^ 
enerp-y  of  a  merchant  amount  to  if  there  are 
none  who  have  the  means  to  purchase  his 
commodities?    Can  he  develop  a  commerce 
by  himself  alone  and  unaided?  But  how  shall 
would-be  customers  provide  themselves  with 
means  for  lar^e  purchases  without  energy  on 
their    part?    The   energy   of  the    merchant 
must  then  be  supplemented  by  the  energy  of 
his  fellows   if  he  would    develop   any  com- 
merce.   Thus   is   he   dependent   on   others. 
"None  of  us  llveth  to  himself." 

Take  a  manufacturer,  let  us  say,  for  ex- 
ample, of  shoes.    It  will  do  him  no  R-ood  to 
produce  shoes  unless  others  havs   valuable 
things  to  fifive  in  exchansre.    The  manufac- 
turer desires  a  vast  market,  but  this  is   im- 
possible unless  the  masses  are  ambitious  and 
industrious.     They   must   have  wants,   and 
energy   must   accompany   these   wants.     A 
laboring  populace  poor  and  indolent  and  con- 
tented with  little  Will  make  few  purchases, 
for  they  will  not  have  valuable  tbintfs  to  offer 
in  exohanee.    Thus   the   manufacturer  can 
only  hope  to  thrive  in  a  prosperous  commu- 
nity.     The    larger    the     earnings    of    the 
artisan   and   mechanic    the    more    can   he 
extend   his  business   with   advantage.    But 
his  dependence  does   not  cease  here.    The 
quality  of   the  labor  whlcn  ho  employs  is  a 
chief  factor  in  success.    Labor  of  hand  and 
brain  Is  the  most  important  element  in  pro- 
duction, and  a  highly  qualifled  and    moral 
population    Is    an   indispensable    condition 
of      permanent     national     and     municipal 
prosperity.    The  more  closely  a  community 
follows  Christian  principles  and  its  members 
concern    themselves    with    the   welfare    of 
others,  the  more  generally  will  its  prosoerity 
be  diffused  and  the  more  rapid  will  be  its  ad- 
vance  in   wealth.       "Am    I    my   brother's 
keeper?"    If  in  any  nation  at  any  time  there 
Is  a  general  inclination  to  answer  that  ques- 
tion in  the  negative,  that  nation  has  already 
entered  upon  a  course  which  leads  to  anarchy 
and  barbarism. 

There  are,  however,  some  more  special  and 
particular  applications  of  these  principles  to 
the  problems  of  municipal  life.  There  are 
certain  fundamental  conditions  of  our  future 
prosperity  which  no  Individual  as  such  can 
supply,  but  which  must  be  provided  by  us  In 
our  orsanic  capacity  as  a  city  and  as  an  im- 
portant part  of  a  commonwealth,  or  not  at 
all.  These  will  be  considered  In  a  following 
article. 


PEOBLEMS  OF  TODAl. 


THE    FUTURE    OF    BALTIMORE. 


BAD  TAXES  BLIGHT  A  CITY'S  GROWTH. 


Frof.  Ely  Urees  That  Business  Ought  Not 
to  toe  Taxed. 

[Written  for  the  Baltimore  Sun.l 

ARTICLE  XXV. 

Taxes  are  levied  to  enable  our  State  and 
city  srovernments  to  perform  their  various 
important  functions,  and  the  burden  which 
they  imiwse  upon  us  is  by  no  means  a  light 
one.  The  total  State  and  city  tax  rate 
for  the  residents  of  Baltimore  is  $1  18M 
on  the  $100  of  property.  This  does 
not  appear  to  be  so  hitrh  a  rate  of 
taxation  as  it  really  is.  Taxes  are  paid  out  of 
Income,  and  the  important  question  is  to 
know  what  ratio  exists  between  taxation  of 
property  and  its  income.  When  we  reduce 
our  rate  of  $1  78,^  'O  a  percentacre  on  income 
it  will  be  found  that  it  is  often  equivalent  to 
an  income  lax  varying  from  15  to  40  percent., 
a  tax  rate  almost  unknown  iu  European 
countries. 

Taxes  are  one  of  the  chief  elements  in  de- 
terminlncr  price  in  nearly  all  branches  of  busi- 
ness which  are  not  mooopoiie-:,  to  which 
totally  different  principles  apply.  The  pro- 
Qortion  of  expenditure  which  is  caused  by 
taxation  is  larger  than  is  generally  realized, 
oven  by  business  men,  for  they  do  not  stop  to 
reflect  upon  the  effect  of  taxes  on  commodi- 
ties, and  other  taxes,  which  are  shifted  from 
the  shoulders  of  the  one  who  originally  pays 
them  to  the  shoulders  of  somebo'ly  else.  We 
have,  then.  In  taxes  one  of  those  fundamental 
conditions  of  industrial  life  which  are  beyond 
the  control  of  the  individual  as  such. 

Inconsiderate  people  who  know  nothing 
about  the  nature  of  business  talk  as  if  it 
made  little  difference  how  taxes  were  laid. 
To  them  the  problem  appears  very  simple. 
Tl  jre  is  so  much  money  to  be  raised,  and  let 
us,  say  they,  collect  it  indiscriminately  in 
proDortion  to  the  actual  selling  value  of 
their  property.  Inasmuch  as  there  is  just  so 
much  money  and  no  more  to  be  paid  to  the 
public  treasury,  it  seems  to  them  to  make 
very  little  difference  how  it  gets  there,  pro- 
vided each  one  bears  what  is  assumed  to  be 
his  fair  share.  This  is  why  our  antiquated 
system  of  taxation  is  still  maintained  in 
Maryland. 

We  live  in  an  age  of  sharp  competition— 
always  excludinjj  the  growing  number  of 
monopolies— and  the  addition  of  a  small 
burden  to  the  loa  J  already  carried  by  a  man 
ensrajred  in  this  competitive  strugtrle  may 
bear  him  down  completely,  while  the  les- 
sening of  his  load  may  enable  him  to  go 
ahead  and  outstrip  others.  A  small  percent- 
aire  on  the  expenses  of  business  may  make  all 
the  difference  to  the  business  community 
between  prosperity  and  ruin.  Now,  nothing 
can  be  further  from  the  truth  than  the  state- 
ment that  it  makes  no  difference  how  the 
taxes  are  laid,  since  they  must  be  laid  some 
way.  A  man  who  acts  upon  that  principle  is 
like  a  man  who  should  apply  the  principles 
and  methods  of  blacksmithing  to  watch- 
makinar.  The  machinery  of  taxation  ought 
to  be  adjusted  to  the  actual  life  of  modern 
jcojmmunitiysjvlth   the   utmost   delicacy  by 


H 


d  both  083  and  the 

principles  of  taxation.  This  ia  another  reason 
why  active  members  of  the  community 
should  (Jive  careful  att  Mition  to  economic 
Paud  social  problems.  Their  success  in  so  far 
as  it  depends  upon  such  a  matter  as  taxation 
ia  conditional  upon  what  others  do.  as  well  as 
upon  what  they  themselvea  do,  aometimes 
even  more  than  upon  what  they  themselves 
do;  and  Jf  I  were  called  qpon  to  name  the 
most  serious  mistake  ot  American  business 
men,  I  should  say  It  was  the  failure  to  jflve 
sufficient  attention  to  the  social  forces  which 
produce  prosperity. 

There  are  certain  things  which  can  neither 
leave  us  nor  come  to  us.  City  lots  will  serve 
as  an  example.  It  is  manifest  that  taxes  upon 
city  lots  will  not  injure  business.  There  is  a 
certain  amount  of  land  accessible,  neither 
more  nor  less,  and  no  taxation  will  alter  this 
circumstance.  City  lots  in  New  York  are  not 
compeiinjf  with  oily  lots  In  Baltimore.  More 
than  this  is  true.  If  city  lots  are  taxed  on 
all  that  ihey  are  worth— up  to  the  last  dollar 
of  their  sellin?  value,  as  they  should  be  by 
our  law  as  It  stands— Instead  of  discoura^ini? 
enterprise  it  will  encourage  it;  for  it  will 
make  it  harder  for  speculators  to  withhold 
the  land  from  those  who  wish  to  improve  it. 
Let  us  ta^e  shinplog  as  an  illustration  of 
a  business  which  may  come  to  us  or  which 
may  leave  us.  Elsewhere,  shlppinjf  Is  either 
not  taxed  at  all  or  is  taxed  only  on  earninKs, 
and  shippintr  conducted  by  foreigners  is 
often  positively  subsidized.  Shipping  may 
either  leave  this  port  or  other  ports,  and  it 
■will  be  determined  by  relative  advantages. 
Can,  then,  anything  more  absurd  be  imasrined 
than  to  tax  a  dwindling  shipping  at  a  high 
rate,  as  it  is  now  actually  proposed  to  do  in 
the  Maryland  Legislature?  Will  our  ship- 
ping be  improved  If  ships  and  other  vessels 
are  taxed  on  their  full  selling  value?  Can  it 
be  doubted  that  if  a  burden  is  laid  upon  ship-^ 
ping  the  business  of  our  port  will  continue 
to  decline?  If  so,  who  will  derive  the  benefit 
from  the  attempt  to  apply  a  cast-Iron  system 
of  taxation?  Oiher  taxpayers  will  lose,  be- 
cause they  will  derive  no  relief  from  an  un- 
successful attempt  to  lay  taxes,  and  they 
will  be  poorer  on  account  of  the  loss  of  busi- 
ness which  mieht  have  been  theirs. 

A  larere  part  of  our  manufacturing  and 
mercantile  business  is  of  a  similar  nature, 
and  It  can  be  completely  prostrated  by  a  bad 
policy  of  taxation  on  our  part.  Retail  mer- 
chants and  dealers  in  manufactured  articles 
will  not  come  to  Baltimore  If  they  can  do 
much  better  elsewhere,  and  they  will  be  able 
to  do  better  elsewhere  if  the  necessary  ex- 
penses of  business  are  heavier  here  than  in 
other  places.  It  is  consequently  to  our  interest 
to  render  these  necessary  expenses  of  active 
business  hs  smnll  as  possible,  tor  in  that  way 
prices  will  bo  lowered  and  business  attracted. 
We  render  these  expenses  smaller  when  we 
place  a  light  burden  of  taxation  on  business. 
Who  loses  thereby?  No  one,  because  in- 
creased competition  lowers  prices  and  all 
consumers  get  the  advantage  of  cheaper 
prices.  The  problem  is  to  extend  the  busi- 
ness of  Baltimore:  and  to  extend  this  busi- 
ness Implies  lower  prices.  This  is  sufficiently 
simple.  As  business  extends,  the  demand  for 
_4 real  estate  increases,  and  real  estaio  owners 
i  If  certainly  do  nut  lose.  The  differ- 
Hence  between  real  estate  and  business, 
i"wiih    respect    to    tastes,    may    be   brought 


} 


out  by  - ...- - ,  which  seems  paradoxi- 
cal until  one  has  reflected  upon  it.  If  all  taxa- 
tion should  be  removed  today  in   Baltimore 
from  real  estate  and  placed  on  active  busi- 
ness, particularly  on  commerce  and  manu- 
factures, it  would  cause  a  sudden  and  unpre- 
cedented fall  in  real  estate.     Business  would 
be  crippled  and  so  many  would  leave  Balti- 
more that  owners  of  houses  and  lots  would 
almost  be  glad  to  give  them  away.  Should  all 
taxes  be  removed  from  actlce  business  and 
,pl8iced  on  real  estate,  on  the  other  hand,  it  is 
I  doubtful  whether  it  would  produce  any  per- 
imanent    depreciation  of    real  estate.     The 
measure  might  Indeed  so  improve  business  as 
to  bring  about  higher  prices  for  real  estate, 
and  Increased  activity  in  building.     The  ex- 
perience of  New  Tork  city  goes  to  confirm 
this,  for  there  business,   althoujrh     legally 
subject  to  taxation.  Is  practically  well-nigh 
exempt,  and  real  estate  nowhere  sells  for  so 
high  a  price.  It  Is  to  be  noticed,  further,  that 
there  is  a  deliberate,  systematic  attempt  on 
the  part  of    New   York  to   draw   business 
away  from  Baliimoreby  lower  taxes.    The 
mayor    of     New      York     practically     re- 
fuses to  trv  to  enforce  the    laws  as  he  finds 
them— for  there  they  have  the  same  anti- 
quated laws  which  we  have  here— and  urges 
their  rei)eal  on  the  ground  that  they  are  the 
outcome  of  impracticable  theories  and  ham- 
per business.    He  ursres  the  repeal  of  all  ex- 
isting taxes  on  busitiess,  in  order  to  swell  the 
commerce  of  New  York,    It  is  such  consid- 
erations as  these  which  led  a  writer  on  taxa- 
tion to  frame  a  practical  rule  which  he  wished 
to  "have  cut  into  the  stone  at  the  Capitol  (in 
large  letters  and   have  them  gilded)  in  the 
Senate  chamber,  the   hall  of  the  House  of 
Kepresentatlves,  and  in  the  Governor's  office." 
The  rule  reads  as  follows:  *'Never  tax  anything 
that  tvovld  b4  of  value  to  your  State^  that  could 
and  would  run  away,  or  that  could  and  would 
come  to  you." 

While  this  rule  may  be  too  sweeping,  it  is 
worthy  of  careful  consideration.  The  more 
one  reflects  upon  the  nature  and  the  con- 
•equencea  of  taxation,  the  more  profoundly 
one  is  impreseed  with  its  far-reaching  impor- 
tance. Taxation  may  create  monopolies,  or  it 
may  prevent  them;  it  may  diffuse  wealth,  or 
it  may  concentrate  it;  it  mar  promote  liberty 
and  equality  of  rights,  or  it  may  tend  to  the 
establishment  of  tyranny  and  despotism;  It 
may  be  used  to  brlnar  ab  )Ut  reforms  in  indus- 
trial society,  or  it  may  tie  so  laid  as  to  aggre- 
gate existing  grievances  and  foster  dissension 
and  claiS-hate;  taxation  may  be  so  contrived 
by  the  skillful  hand  as  to  give  free  scone  to 
every  opportunity  for  the  creation  of  wealth 
and  the  advancement  of  all  true'  Interests  of 
the  clty,or  It  may  be  s^i  shaped  by  Ignoramuses 
as  to  place  a  dead  'velght  on  Baltimore  la  the 
race  for  municipal  supremacy  on  the  Atlantic 
coast. 

The  single  business  man,  as  an  individual, 
is  helpless  in  this  matter.    It  rests  with  us, 
oiti»t«i8  ot  Baltimore  and  Maryland,  to  estab- 
lish tho«e  social  conditions  wolch  will  allow 
every  man  the  fullest  and  freest  opportunity 
to  do  his  best    to  m.  ke  Baltimore  what  we 
wish   Baltimore  to  become.    Shall  wo  wait 
until  all  our  neighboring  cities  move  in  this 
matter,  and  lay  behind  with  our  abominable 
and  barbarous  system  of   business  licenses 
and  personal  property  taxes,  or  shall  we  be 
the  first  to  strike  out  boldly  in  the  establish- 
I  mentof  a_railonal  system  of  taxation,  a  :d 


J 


thus  have  the  advantaire  over  others  of  a 
start  In  I  he  race?  It  ia  a  cheerinar  sign  that 
our  husiness  men  have  moved  in  this  matter, 
and  passed  resolutions  petltloniDe  the  Leg-isf 
lature  to  submit  a  constitutioDal  amendment; 
to  the  people  makipg  possible  a  new  system 

of  taxation.  The  move  liaa  been  maae  none 
too  soon,  and  it  should  be  followed  up  by 
vicorous  action. 

Other  social  forces  which  produce  munici- 
P'l  greatness  must  be  reserved  for  future 
contideration. 

S£IX  FRANCHISES  AT  AUCTION. 


Pay   the  Taxes— 

to     Discuss    tbe 


Make  the  Monopolies 
Prof.  Kly  Continues 
Future  of  Baltimore. 

I  Written  for  the  Baltimore  Sun.l 

ARTICLE  XXVI. 

The  importance  of  a  ritrht  placing  of  taxes 
has  been  considered.  The  amount  of  taxes 
raised  Is  obviously  an  essential  element  in 
determining  the  future  of  a  city.  Our  munici- 
pal taxes  have  become  truly  exorbitant. 
Much  as  we  talk  about  them,  few  realize  it. 
In  my  last  article  it  was  sugarested  that  the 
burden  misht  perhaps  be  better  appreciated  if 
our  proporty  tax  were  translated  into  a  tax  on  I 
the  income  which  property  yields.  Compara- 
tive statistics  help  us  also  to  understand 
how  great  the  load  of  taxation  in  American 
cities.  Consider  this  fact,  which  I  discovernd 
a  few  years  ago  in  comparing  the  budgets  of 
New  York  and  Herlin.  The  interest  on  the 
debt  of  C^ow  York  was  then  nearly  sufficient 
to  defray  all  the  expenses  of  Berlin,  nearly  as 
larjre  a  city  and  one  more  dis^dvaatugeou=ly 
situated  with  respect  to  sanitation  and  keep- 
ing the  etreeTs  clean.  Berlin  is  governed,  it 
mar  be  remarked,  by  those  who  make  it  their 
business  to  understand  tbe  principles  of 
municipal  administration;  that  is,  so-called 
theonstsi  It  is  said  to  be  the  best  governed 
city  in  the  world,  and  so  may  not  be  a  fair 
example;  but  this  entire  article  could  be  filled 
up  with  statistics  to  show  bow  undue  a  bur- 
denwe  are  susiaining  in  taxation  in  Ameri- 
can cities. 

It  is  the  commonest  thing  In  the  world  for 
worthy  citizens  to  write  to  their  daily  papers 
exhorting  the  city  fathers  to  keep  down  ex- 
penses and  reduce  tbe  tax  rate,  and  the 
newspapers  from  rime  to  time  come  out  with 
head  lines  like  this,  **lletrenohment  a  Neces- 
sity.*' Yet  what  good  does  It  do?  Expendi- 
tures continue  to  swell  in  our  cities  relatively 
faster  than  in  our  Stat 'a  or  at  Washington. 
While  State  expenditures  double,  municipal 
expenditures  Increase  fourfold  or  more. 
Ohio  may  serve  as  an  illustration.  The  ex- 
penses of  the  State  increased  about  forty-six 
times  in  sixty  yeras,  and  the  local  expenses 
one  hundred  times.  T  have  yet  to  find  one 
exception  to  this  treneral  rule  that  municipal 
expenditures  increase  faster  than  any  other; 
perhaps  I  should  say  local  expenditures,  for 
I  mean  to  include  villages  and  other  local 
political  units  as  well  as  great  cities. 

It  is  well  to  say  "reduce  taxes,"  but  it  is 
said  to  no  purnose  unless  It  can  be  shown 
HOW  taxes  are  to  be  reduced.  Let  us  clear 
the  (rround— not  by  theorizing,  but  by  exam- 
,  intng  a  few  facts  which  can  be  established 
beyond  controversy. 
It  is  a  general  supposition  that  the  increase 


.  .i.VUM   S.    ^M.        I  I"    l|lim     |ll| 

In  the  burden  of  taxa^ 


^o^. 


io3  13  aui 

to  corruption.    This  is  doubtless  a  partial  ex- 
planation,  but  very  incomplete  and  imper- 
fect.   There  are  two  European  countries  at 
least  where  municipal  admi'jlstration  Is  above 
reproach  In   respect  to  integrity  of  officials, 
and  these  are  England  and  Germany,  whereas 
it  may  be  said  trenerally  that  in  Europe  mu- 
nicipal corruption  is  hardly  one  of  the  prob- 
lems of  the  day.    Nevertheless,  it  is  true  that 
the  expenditures  of  Euronean  cities  have  in- 
creased in  recent  years  with  greater  relative 
rapidity  than  those  of  American  cities.    This 
has  been  satisfactorily  demonstrated  by  Dr. 
Simon  N.  Patten,  of  Illinois,  In  a  monograph 
on  the  finances  of  American  States  and  cities. 
This     must     not    be   misunderstood.      The 
statement  is  not    that     the     expenditures 
are     as     large     as     ours,     but     that     the 
rate     of     increase     for     ten     or     fifteen 
years  at  least  has  been  more    rapid.    This 
also  is  diflferent  from  saying  that  the  rate  of 
taxation  has  increased  correspondingly,  for 
there  are   many  other  possible  sources   of 
revenue  than   taxes.    Dr.   Patten   has  also 
shown  some  other  interesting  facts  bearing 
on  this  problem.    One  is  that  democracy  is 
not  the  cause  of  increased  expenditures,  as 
superficial  observers  so  often  suppose.    Eu- 
ropean cities  generally  have  at  least  some 
restrictions  on    the   rlarht   of   suflfrage,    yet 
their  expenditures  have  Increased  more  rap- 
idly than  our  own.    But  there  are  American 
facts  of  still  more  striking  character.    It  is 
said  that  universal  suffrage  eives  a  vote  to 
those  who  have  no  economic   Interests  at 
stake  in  the  community,  and  that  they  con- 
sequently vote  away  other  people's  money 
with    reckless  prodicality.    Dr.   Patten   has 
shown,    however,   that   In   small     Northern 
towns,  where  the  vast  majority  of  voters  are 
taxpayers,  the  tax  rates  have  increased  more 
rapidly  than  in  the  large  cities;  further,  he 
has  given  evidence  to  show  that  real  estate 
speculators,  by  urging  on  untimely  improve- 
ments,  like  sewers   running  into  the  coun- 
try—as recently  happened  in  Buffalo— have 
done  more  to  raise  taxes  than  tbe  ignorant 
voter.    The  object  of  the  real  estate  specu- 
lators Is,   of   course,   to  keep  a  boom  alive. 
Now.  these  are  no  fanciful  theories;  they  are 
hard  facts.    What  do  they  show?   They  show 
at  least  this:  The  general  public  has  not  gone 
deep  enousrh  in  its  attempts  to  explain  the 
growing  burden  of  taxation. 

The  true  causes  for  the  growth  of  munioi- 
pal  expenditures  are  after  all  not  difficult  to 
discover.  The  functions  of  the  local  political 
unit  have  been  Increasing  more  rapidly  than 
those  of  either  State  governments  or  our  fed- 
eral governmnet.  We  hear  a  great  deal  about 
centralization.  The  truth  is  that,  relatively 
speakinsr,  we  live  in  an  age  of  decentraliza- 
tion. Our  local  political  units  are  gaining  in 
importance  fa8ter  than  our  sovereign  States 
or  our  sovereign  federal  government.  I  do  not 
say  that  there  is  no  tendency  in  our  central 
governments  to  extend  their  functions.  I  say 
merely  that  relatively  they  do  not  hold  their 
own  in  importance. 

Sanitation  and  public  schools  are  two  great 
items  in  the  budgets  of  cities.  Light  and 
water  are  two  more,  and  in  all  these  respects 
what  satisfied  us  once  is  no  longer  tolerable. 
Publicparks.  cost  hundreds  of  thousands  and 
even  millions  in  cities*    New  York  city,  for 


Mb 


example,  oroDOsea  to  spend  one  million  dol- 
lars a  year  to  provide  small  parks  In  the  most 
crowded  purtlous  of  the  metropolis,  a  meas- 
ure    demanded    on    sanitary   no   less   than 
humanitarian  flrrounds.    Public  libraries  are 
maintained  byaprowlnar  number  of  cities, 
and  the  expense  of  maintainlnsr  these  is  not  In- 
sl^nifloant.    Boston   spent   over  $160,001)    on 
her  public  library  in  a  singlo  year  recently. 
Public    baths     are     among    iho     hundred 
and    one    other     Items    which    misrht    be 
mentlone<3.     Go    through    the     tyhole    list 
of     thinifS     for    ^hich     the     modern    oiiy 
spends    money  and   it   will  be  found   that 
many  items  are  quite  new,    while  the   ex- 
penditures forne  rly  ail  have  Increased  enor- 
mously.   We  have  now  discovered  the  chief 
cause  of  Increased  municipal  expenditures. 
Extravai?aniJe  and  dishoneaty  have  after  all 
been  minor  causes,  and  their  Importance  has 
been  unduly  magnified.    Many  an  American 
municipality  Is  manasred  without  fraud,  and 
in  only  a  few  firreat  cities  has  the  dishonesty 
been  what  the  people  have  imagined.    It  has 
been  bad  enousrh,  it  is  true,  and  it  is  a  burnintr 
shame  and  disgrace  to  us  that  there  hns  been 
so  much   municipal  corruption  in  America. 
Nevertheless,  that  is  not  the  chief  cause  of 
large  expenditures  of  public  money. 

It  is  further  safe  to  say  that  we  have  not 
got  to  the  end  of  the  era  of  increasing  local 
expenditures.    When  one  reflects  upon  cer- 
tain current  phenomena,  one  must  be  rather 
inclined  to   thinfc   at   times    that   we   have 
scarcely  more   than   entered  upon  it.    The 
public  demands  on   the  municipal  adminis- 
tration grow  steadily  year  by  year.    Better 
pavements,  improved   sewerage,  more  small 
I)ark3   and   manual   training  in  schools  are 
among  the  pressing  needs  of  the  hour,  and  a 
demand  for  other  public  expenditures  is  just 
hecinning  to   be   heard.     Play  grounds    for 
children  and  opoortunitieg  of  physical  cul- 
ture, that  the  rising  generation  may  grow  up 
strong  and    healthy,  are   among  the  things 
which  people  want.    The  housing  of  the  poor 
is  a  matter  over   which    English  cities  are 
exiendintr  their  care,  and  who  is  wise  enough 
to  say  that  the  common  welfare  may  not  yet 
compel  American  ciaes   to  move  in  this  di- 
rection?   It  is  needless  to  continue  the  enu- 
meration. The  growth  of  municipal  expendi- 
ture is  B  part  of  the  srrowth   of  civilization, 
and  is  likely  to  continue   for   an    indefinite 
period.    We  cannot  stop  it  without  lagging 
behind  in  the  march  of    proeress.    Whining 
and  complaining  do  no  good.    To  write  arti- 
cles containing  nothing  but  the  ceaseless  re- 
frain, "reduce  tuxes,"  is  folly.    Yes,  we  must 
reduce  taxes,  but  how? 

There  Is  a  very  simple  way,  and  the  Ameri- 
can city  which  first  enters  upon  it  and  keeps 
to  it  persistently  and  systematically  is  going 
to  have  a  tremendous  advantage  over  its  com- 
potitors.    It  la  the  fuU  and  complete  utilization 
of  alt  natural  monopolies  for  the  benefit  of  the 
public.    This  is  the  way,  and  the  only  way.  to 
reduce  taxes.    If  our  business  men  will  turn 
their  serious  attention  to  this,  and  endeavor 
to  force    rleht   action  upon    our   municipal 
councillors  aid  our  leglslatora,  they  will  see 
a  most  gratifying  reduction  in  their  tax  bills, 
una  will  witness  a  new  and  unparalleled  period 
of  prosperity  in  Baltimore.    It  is,   I  believe, 
perfectly  practicable  to  reduce  the  tax  rate 
to  one  dollar  on  the  hundred  of  property  in 
ourcjty,  and  that  is  quite  enough. 


I     The  principle  which  should  guide  us  is  very 
1  simple,  and  will  readily  occur  to  those  who 
have  read  the  previous  articles  in  this  series. 
It  18  to  exact  from  tvery  natural  monopoly  using 
public  property  full  compensation.    What  does 
rull   compensation    mean?      It    means    this: 
Making  Just  as  good  terms  for  the  public  as 
a  private  man  oould  make  for  himself.    Let 
us  imagine   for   the  moment  that  a  private 
man  owned  absolutely  the   streets  of  Balti- 
more.   How  would  he  manage  the  street-car 
business?    He  would  give  no  favors  to  any- 
body.   He  would  either   operate  the  street 
Ciirs  himself  or  lease  the  privilege  to  the  one 
who  would  give  the  most,  and  never  under 
anv  circumstances — I  take  it  for  granted  that 
the  man  is  saue;— would  he  give  a  perpetual 
lease.    Short,  terminable  leases  are  the  kind 
private  men  give,  and  thus  keep  complete 
control  of  their  own  property.    Yet  witness 
the  carelessness  and  indifference  of  our  busi- 
ness men  and  the  general  public  about  this 
matter.    Every  one  of  us  has  an  interest,  and 
the  Interest  of  a  single  family  is  very  consid- 
erable, but  no  one  seems  to  concern  himself 
about  his  own  Share  in  the  public  property. 
Take  the  case  of  street-car  fares.    A  certain 
public  policy  would   ultimately  lead  to  the 
establishment   of    three-cent    fares,    which 
would  easily  be  worth  forty  dollars  a  year  to 
a  family  of   five  persons  living  a  little  dis- 
tance from  the  centre  of  Baltimore.    Forty 
dollars  a  year  is  interest  on  one  thousand  dol- 
lars.   Now,  if  the  head  of  an  ordinary  family 
heard  that   there  was  a  chance  for  him  to 
come  into  an  inheritance  of  a  thousand  dol- 
lars how  eater  would  he  he!    How  actively 
would  he  follow  up  all  his  legal  claimsl    Yet 
he  scarcely  will  turn  on  his  heel  to  influence 
the  Lesisla'uro  in  the  matter  of  some  most 
astounding  street-car  bills  now  before  that 
body.    On  the  contrary,  when  you  begin  talk- 
ing with   him  on  this  matter  he  will  make 
such  petty  and  trivial  objections  to  a  sound 
policy— in  successful  operation   elsewhere— 
that  one  is  tempted  to  believe  that  three  men 
out  of  four  lose  their  common  sense  when 
they  begin  talking  about  public  measures. 

Our  merchants  may  be  said  to  have  a  still 
greater  interest  in  this  matter.    If  fares  are 
reduced,  the  surplus  Income  of   every  man 
and  woman  in  Baliimoro  will  thereby  be  in- 
creased and  their  sales  will  grow  in  amount. 
On  the  other  hand,  if  franchises  are  sold  at 
auction  taxes  may  be   reduced,    and   thfere 
they  will  gain.    Who  in  our  Lecrislatures  sug- 
gests proper  restrictions   on   franchises  for 
natural  monopolies?    Is  it  not  time  for  our 
business  men  to  move  in  this  matter?    New 
York  city  has  already  moved,  and  will  obtain 
Increased  revenues  from  franchises  in    the 
future,  there  is  nason  to  believe,  for  under 
Mayor  Hewitt  a  halt  has  been  called  in  the 
prodipal  waste  of    public  resources,  and  his 
last  message  to   the   council  of   New  York 
abounds  in  suggestions  analogous  to  those  in 
this  article.     Will  Baltimore   be  the  last  to 
move?    WJll  Baltimore  business  men  delay 
aotioh  until  opportunity  to  save  what  public 
property  yet  riiroalns  Is  lost? 

The  same  principle  holds  good  with  regard 
to  railroads  operated  by  steam.  Let  them  pay 
for  every  piece  of  public  property  its  full 
value  to  the  last  cent.  To  exact  less  is  to  rob 
"the  forgotten  millions."  North  street,  pub- 
Uc  property,  is  occupied  by  a  railroad.    How 


mucti  annual  compensation  does  the  city 
receive  therefor?  It  ought  to  be  worth  many 
thousands  of  dollars  a  year  rent  to  use  a 
street  in  a  great  city.  If  it  were  ray  prop- 
erty I  sbould  demand  for  It  what  it  was 
wortb.  Why  should  the  city  do  less?  Or  is 
It  not  time  to  stop  taidns  a^ay  the  property 
of  the  many  and  glviaer  it  to  the  few? 

Gas  supply  and  electric  lights  are  of  the 
same  nature,  save  that  the  city  ought  to 
make  provision  as  soon  as  possible  to  acquire 
works  of  its  own.  Yet  we  hear  a  good  deal 
of  foolish  talk  about  competition  in  electric 
lighting  stilll  Experience  will  teach  us  bet- 
ter. But  why  wait  until  we  have  paid  the 
dear  tuition  which  experience  charges  be- 
fore we  act?  The  correct  meljhod  in  such 
cases  is  simple  enough.  Existing  companies 
should  bo  bought  out  If  they  will  sell  at  a 
reasonable  price;  otherwise  they  sbould  be 
brought  to  terms  by  a  vigorous  municipal 
competition.  No  legal  monopoly  should  ever 
be]  granted  a  , private  oorjKjration,  for  that 
is  worth  a  great  deal  of  mont;y.  As  a  legal 
monopoly  can  only  be  conferred  by  public 
authority,  the  public  ought  to  derive  the  ad- 
vantage therefrom,  and  what  this  advantage 
is,  previous  papers  have  shown.  I  will  again 
only  remind  tbe  readers  of  The  Sun  that 
Berlin  now  defrays  eighteen  per  cent,  of  lis 
expenditure  from  tbe  pronts  on  gas  works 
with  gas  at  less  than  one  dollar  a  thousand. 
Since  I  wrote%]y  article  on  gas  supply  the 
American  consul  at  Leeds  has  told  me  that 
the  people  of  that  city  are  well  supplied  lor 
forty-four  cents  a  thousand. 

The  next  article  will  didcuss  a  few  remain- 
ing social  forces  which  have  a  bearing  on  tbe 
future  of  Baltimore. 

PKOBLEMS  OF  TODAY. 

THE  YALUB  OF  PUBLIC  SPIRIT. 


WE  MUST  REGAIN  SQUANDERED  RIGHTS. 

The  Future  of  Baltimore  Discussed  Fur- 
ther by  Prof.  Richard  T.  Ely,  of  Johns 
Hopkins  Dniversity. 

I  Written  for  the  Baltimore  Sun.  I 

ARTICLE  XXVII. 

A  recent  trip  to  New  York  city  and  to  Vas- 
sar  College,  near  Poughkeeosie,  gave  me  an 
opportunity  to  observe  certain  phenomena 
of  importance  to  a  student  of  municipal  life, 
and  also  to  examine  with  care  the  three  re- 
cent messages  of  Mayor  Hewitt  to  the  board  I 

of  aldermen  of  New  York  on  the  future  of  ' 
that  city. 

The  manufacture  of  gas  at  Vassar  College 
Interested  me.  The  gas  is  of  a  superior 
quality,  as  good  as  it  has  ever  been  my  lot  to 
burn.  Less  than  t«renty  thousand  feet  are 
manufactured  a  day,  and  the  coal  must  b« 
catted  two  or  three  miles  from  the  Hudson 
river.  I  was  told  that  it  was  worth  sixty 
ceiits  a  ton  to  cart  the  coal  to  this  college. 
Yet  even  on  tbis  small  scale  and  under  these 
disadvantageous  circumstances,  it  costs  the 
college  only  eighty  cents  a  thousand  to  man- 
ufacture its  gas,  •^■tjUe  the  people  in  the 
neighboring  city  of  l^oawbkeepsie  pay  S3  50 
for  an  Inferior  quality  ov  yas.  As  sras  is 
manufactured  on  a  large  scale  >.i  tfte  city, 
which  comprises  over  twenty  thousand  lu- 
habitants,  and  as  coaV  ia  more  readily  ac- 


cessible,  it  can  be  seen  that  the  people  of 
Pougbkeepsle  ought  lo   have  cheaper   ga? 
whereas  they  pay  over  three  times  as  much 
as  Vassar  College. 

Possibly  mayors  of  American  cities  have 
written  abler  messages  than  those  of  Mayor 
Hewitt,  but  it  has  never  been  my  good  for- 
tune to  read  one  of  them.  The  rigorous 
defense  of  the  public  welfare  and  apprecia- 
tion of  the  true  nature  of  the  needs  of  New 
York  city  revealed  by  these  messages  re- 
mind one  of  the  patriotism  of  a  man  lite 
DeWirt  Clinton.  It  seems  to  me  that  Mayor 
Hewitt  ranks  facile  princeps  among  all 
mayors  of  American  cities  for  the  past  twenty 
years  or  more. 

An  Important   question   for  all  our  States 
and  cities  is  to  know  how  to  recover   public 
rights  which  have  been  thoughtlessly  allowed 
to  pass  into  private  hands,  and  to  safeguard 
such  public  property  as  still  exists  after  the 
reckless  prodigality  with  which  Legislatures 
and   municipal   councils    have    squandered 
other  people's  money  during  the  past  genera- 
tion.   The  6dn  has  already  published  edito- 
rials  on   constitutional   changes  which   are 
needed  to  accomplish  this  desirable  end,  and 
the  recommendations  made  in  these   edito- 
rials are  in  keeping  with  the  teachlntrs  of  po- 
litical science.    The  chief  of  them  ia  to  pro- 
vide by  constitutional   amendment  that  any 
corporation  which  seeks  or  accepts  any  new 
legislation   thereby  places   itself    under  tbe 
reserved  rights  of  the  people  to  control  all 
grants  of  privileges  to  corporations.    Thus 
the   effect  of  the   unfortunate   Dartmouth 
CoUesre  decision  Is  to  a  certain  extent  ob- 
viated,  and  artificial  persons  are   rendered 
subject  to  the  law  more  nearly  like  natural 
persons.      The    recommendations   of  Mayor 
Hewitt  contain  similar  provisions  for  muni- 
cipal  franchises.    He   would    make   natural 
monopolies  pay  for  every  new  privilege,  and 
thus  gather  up  the  fragments  of  public  prop- 
erty that  nothing  further  may  be  lost.    The 
time  appears  to  have  come  for  a  substitution 
of  cable  or  electric  traction,  for  horses  on 
street  railways.    This  Is  desirable  on  many 
accounts,     and     is    recommended     by    the 
mayor.    But  he  adds  the  following  remarks 
\  to  bis  approval  of  tbe  change:    ^'Inasmuch  as 
this   change  will  be  profitable,  however,  to 
tbe  railway  companies,  a  portion  of  the  sav- 
ing should  be  secured  to  the  city  treasury.    I 
recommend  that  a  careful   investigation  be 
made  as  to  tbe  amount  of  this  saving,  in  order 
that  the  necessary  consent  of  the  common 
council  may  be  given  upon  conditions  which 
shall  be  fair  to  both   parties, 
tbe  franchise  will  depend,  of 
upon  the  volume  of  the  business,  and  there- 
fore  the   ea:ne   percentage   o:   the  receipts 
could  hardly  be  exacted  in  every  case.    But 
tbe  companies  should  oompeusate  the  publio 
for  the  use  of  the  streets  upon  an  equitatle 
basis  of  division,  and  the  Legislature  shot  Id 
carefully  guard  the  rights  of  the  oiiyand  tbe 
interests  of  the  taxpayers  in  any  legislation 
authorizing  tbe  use  of  cable  traction." 

Suggestions  in  regard  to  rapid  transit  aro 
made  which  are  of  value  to  us  in  Baliimore 
in  shaping  our  future,  and  particularly  in 
view  of  the  proposition  to  utilize  Jones's 
Pall  for  rapid  transit.  It  is  recommended  by 
Mayor  Hewitt  that  the  city  provide  rapid 
transit,  which  it  can  do  cheaper  than  private 
parties,  for  it  can  borrow  money  j^t  three  per 


Tbe  value  of 
course,  lararely 


A 


Qk/' 


ceDt.,  while  private  individuals  caust  pay  five. 

It  is  here  suirsrc^sted  tbat  the   rapid    transit 

roads  be  leased  for  thirtf-flve  years  for  Ave 

p«r  cent,  of  their  cost.    Tl^d  oity  would  not 

two   per  cent.,   which   in  thJrty-flve   years 

would  redeem  the   principal,  and  thus  the 

road  would  become  public  property  without 

jthe  expenditure    of    a,    O'-nt    in    ta.Tation. 

This     is    anulofiroua    to     principles    which 

have,   without    di^Qoulty,    been   applied   in 

other  coumries,  and  seems  to  be  favored  by 

men  most  competent  to  speak  on  this  subject , 

I  In  New  Yorlt»  althoujrh  some  evidently  ihiak 

I  that  tbe  city  should  manag'e  the  entire  en 

terprise  without  the  intervention  of  a  co 

poration.     The  lucoess    of    the    Brooklya 

Bridge  Street-Car  Line,  operated  by  puWio 

authority,  has  been  cited  a^  a  proof  of  Jhe 

superiority  of  public  management.  / 

Public  spirit  should  be  cultivated  by  as  in 
Baltimore  if  we  would  make  our  future  What 
we  would  like  it  to  be.    Pubiio  spiri^  leads 
people    to    reflect  on   the   publio  welfare, 
and  to  consider  measures   from  the  stand- 
poiatof    the  (greatest  jjood  to  the  greatest 
cumber.     A    correct    course  of    action    is 
an    inevitable    result;    public     risrhts    and 
public    property    are    watched   with    Jeal- 
ous care,  public  enemies  are  exposed,  and 
expensive  errors  in  municipal  measures  are 
avoided.    New  York  city  now  finds  it  neces- 
Bary  to  sro  to  an  enormous  expeuse  in  tearinir 
down  buildlnjfs  in  the  crowded  parts  of  the 
city  to    provide   small    parks   as    breatbintr 
places  for  the  poor  people.    It  would  have 
practicable     to     have     reserved    frequent 
open  squares   years  a?o,  and  it  would  not 
hare  cost  the  hundredth  part  of  what  it  now 
does  to  construct  these  little  parka.    It  was 
well  known  by  those  who  thouRrht  about 
iuch  matters  that  they  would  be  needed,  but 
there  was  not  publio  spirit  enoutrh  to  induce 
action.    Open  squares  are  needed  In  Balti- 
more in  various  sections   now  destitute*  of 
them,  and  to  acquire  them  today  will  involve 
a  far  smaller  burden  than  to  wait  until  popu- 
lation is  denser  in   these  sections.    Alittle 
forethought  and  public  spirit  are  the  only 
requisites.    New  York  now  finds  it  advan- 
tajfeous  to  acquire  water  front.  Thif  involves 
an  enormous   outlay.    How  muoA  easier  it 
would  have  been  to  reserve  aF  the  water- 
front at  the  besrinnlnarl    Lack  o^  public  spirit 
led  again  to  an  expensive  mlg^ke. 

There  are  various  ways  /n  which  publio 
spirit  can  be  measured.  Th/amountof  publio 
enterprise  is  a  good  test/  The  provinces  of 
Quebec  and  Ontario,  /h  Canada,  may  be 
profliably  compared/  The  Canadians  in 
Quebec  have  so  littl/public  spirit  that  it  is 
impossible  to  main«tin  good  roads  by  public 
authority,  conseq/ootly  highways  are  banded 
over  to  private  Q/rporatlon8,who  collect  high 
tolls  and  thu^'  obstruct  business  by  what 
amounts  to  a  svstem  of  indirect  taxation. 
Publio  spiritls  more  active  in  Toronto,  and 
there  are  t^^  if  any  toll  roads  In  thut 
province.  This  difference  In  publio 
spirit  Is  a  chief  cause  of  difference 
In  wealth.  One  of  my  earliest  recol- 
lections—I  can  only  just  remember  it- 
was  a  toll  road  in  New  York  8tate,  but  for 
many  years  I  have  not  seen  one  in  New 
York  or  Massachusetts.  One  of  the  first  con- 
ditions of  prosperity  is  the  freest  exchange 
of  services  and  commodities,  and  In  a  very 
wealthy  community  toll  roads  will  hardly  be 


found.  This  is  but  one  Illustration.  Where 
publio.  spirit  is  in  a  low  ooiidiiion  public  au- 
thori(y  id  unable  to  perform  its  proper  func- 
tions, and  they  are  with  loss  handed  over  to 
private  Individuals. 

Huxley's  article  on  '*The  Struggle  for  Ex- 
istence" in  the  Nineteenth  Century  is  valuable 
reading  for  those  interested  In  the  future  of 
Baltimore.  Huxley  shows  that  hishly  quail- 
fled  labor,  both  as  respects  physical  develop- 
ment arid  training  of  hand  and  head,are  to  be 
the  first  condi'ioos  of  success  in  the  future 
Btrucgle  for  national  and  municipal  pre-emi- 
Itenoe.  On  this  ground  he  favors  the  restric- 
tion of  child  labor  and  generous  provision 
for  technical  education.  Huxley  regards  a u 
Ignorant  person  as  a  "burden  upon,  and,  so 
far,  an  infringer  of  the  liberty  of  his  fel- 
lows." So  profoundly,  indeed,  is  he  im- 
pressed with  the  necessity  for  education  as  a 
condition  of  survival  that  ho  places  a  tax 
for  education  in  the  same  category  as  '*a  war 
tax  levied  for  purposes  of  defense."  It  was, 
}n  fact,  when  Eoirland  saw  her  industrial 
supremacy  threatened  by  the  better  edu- 
cated German  that  she  began  to  act  viiror- 
ously  In  this  matter,  just  as  France,  when 
She  saw  her  military  power  overthrown  by 
•*the  schoolmaster  at  Sedan,"  began  to  intro- 
duce universal  and  compulsory  education. 
Would  we  in  Baltimore  hold  our  own  with 
oitiea  like  Boston,  New  York,  Chicago  and  St. 
JLouls  doing  so  much  more  than  we  for  edu- 
oatlon,  we  must  bestir  ourselves. 

Similarly  Huxley  shows  that  a  temporary 
Buccess  gained  by  starvation  wages  and  child 
labor   is  Illusory  because    in  lowering   the 
efficiency  of  man,  the  chief  factor  in  pro- 
duction, power  to  bold|one's  own  in  the  strug- 
irle  for  existence  18    lost     "A  population," 
says  Huxley,  ''whose  labor  is  Insufficiently 
remunerated  muse  become  physically    and 
morally    unhealthy,   and  socially   unstable, 
mod  though  it  may  succeed  for  a  while  in  in- 
dustrial competition  by  reason  of  the  cheap- 
ness of  its  produce,  it  must  lathe  end  fall, 
through  hideous  misery  and  degradation,  to  ; 
Utter  ruin."    Huxley  emphaaiaea  the  (act  J 
that  he  speaks  as  a  naturalist,  and  as  such  his 
pre-eminent  ability  will  not  be  questioned. 
It  is  incomprehpnslblehow  aman  can  appre- 
ciate the  advantages  to  a  country  of  improved 
breeds  of  horses  and   cattle  and  at  the  same 
time  fail  to  see  that  a  strong,  viuorous  and 
Intelligent  population  is  a  thousand    tlmeg 
more  important  in  the  race  for  wealth. 

What  we  want  to  do  in  Baltimore  is  to  de- 
velop our  strong  points.  A  city  is  like  an  in- 
dividual. Formerly  every  man  did  every 
thing,  taught  school,  preached,  practiced 
medloino,  made  shoesi,  built  houses,  and  I 
know  not  what  else  besides.  Now  the  condi- 
tion of  success  for  States  and  cities,  as  well 
as  men  and  women,  is  to  find  out  their  strong 
points  and  to  do  some  things  better  than  any- 
body eUe. 

It  is  often  asked  what  makes  Baltimore 
grow?  Where  do  the  people  come  from  to  oc- 
cupy all  these  new  houses?  One  reason  for  our 
growth  is  that  Baltimore  is  a  delightful  city 
to  live  In,  and  also,  comparatively  speaking, 
a  cheap  one.  People  come  here  in  vast  num- 
bers on  these  two  account?,  for  there  is  in 
modern  society  a  largo  class  of  people  who 
are  so  situated  that  they  can  easily  change 
their  residences.  A  little  inquiry  will 
probably  oouvince  any  one  of  the  impor- 
tance of  these  two  facts.     These  are  strong 


:: 


points,  and  they  oufirht  to  be-,deyelopea  pru- 
dentlV  but  visorously.  Public  improve- 
ments should  g-o  forward  as  fast  as  the 
municipal  flnances  will  warrant;  public  prop- 
erty should  be  fully  utilized  for  the  benefit 
of  the  public;  cheap  water,  cheap  lijrht  and 
chetrp  ifansDortation  should  be  provided. 
Tbe  cheaper  the&o  indispensable  elements  of 
life,  the  more  will  people  toe  attracted  to 
Baltimore.  The  indispensable  conditions  of 
life  are  also  elements  in  the  cost  of  business, 
and  to  reduce  them  eives  us  a  superior  ad- 
vantagre  in  the  struKsle  for  existence. 

As  to  waarea,  the  real  question  is  not  how 
much  are  watres  in  money,  but  what  will 
money  wages  buy?  Baltimore  has  in  this  an 
advantage  over  a  place  like  New  York.  The 
Johns  Hopkins  University,  for  txample,  has 
thus  an  ad  vautajre  over  Columbia  College  in 
New  York  city.  Other  things  being  equal, 
Baltimore  can,  for  the  same  salary,  get  a 
better  man  than  New  York.  For  my  part, 
having  lived  in  both  cities,  I  should  prefer  a 
salary  of  $3,000  in  Baltimore  to  one  of  14,000 
in  New  Tork.  The  cheaper  the  cost  of  livinar, 
the  better  the  clasa  of  employes  business 
men  can  get  for  a  given  rate  of  wages.  This 
was  why  the  manufacturers  in  England 
worked  so  hard  to  get  the  duties  off  imported 
food  products  forty  years  ago,  and  the 
cheaper  cost  of  living  made  possible  the 
Industrial  expansion  of  England. 

The  educational  advantauea  of  Balti- 
more are  a  cause  of  increased  popu- 
lation of  considerable  moment.  It  is 
probable  that  the  Johns  Hopkins 
University  alone  will  lead  to  an  expenditure 
of  a  million  dollars  a  year  by  prof  t-ssors,  stu- 
dents and  families  who  are  by  it  brought  to 
Baltimore,  and  the  present  expenditures  con- 
nected in  the  one  way  and  another  with  this 
institution  are  sufficient  to  support  a  small 
town.  The  Hopkins  Hospital  will  similarly 
help  Baltimore,  as  will  the  new  Maryland  Col- 
lege for  Women.  The  Peabody  Institute,  the 
Pratt  Library,  and  even  a  private  gallery  like 
that  of  Mr.  Walters,  do  their  shar»  to  bring 
money  and  people  to  Baltimore,  and  thus  to 
keep  the  city  alive.  Yet  it  has  actually  been 
proposed  to  cripple  all  these  Institutions- 
save  the  Pratt  Library,  which  ranks  as  a  pub- 
lic institution— by  taxation! 

CHABT£BS  MUST  BB  LIMITBD. 


Government  0-wner»hip  of  Bailvrays — 
Prof.  Bly,  of  Jubng  JUopkius  University, 
Discusses  tbe  Corporation  Probleui. 

LVVritten  for  the  Baltimore  Sun.l 

ARTICLB    XXVni. 

The  severe  storm  which  we  have  experi- 
enced this  week  In  Baltimore  has  as:ain  em- 
phasized the  importance  of  electrical  sub- 
ways. The  fact  that  there  can  never  be  any 
real  competition  in  the  matter  of  these  sub- 
ways Is  eo  self-evident  that  no  attempt  has, 
so  far  as  I  know,  been  made  to  apply  the 
principles  of  competition  to  them.  There  is 
a  choice  between  two  courses  of  action  only, 
namely,  rellanoa  upon  a  private  monopoly 
and  a  public  undertaking.  New  York  city  is 
tryfng  a  private  monopoly,  and  valuable  les- 
sons may  be  derived  from  the  experience  of 
that  city.  The  private  company  was  strongly 
resisted  by  the  companies  which  it  was  pro- 
posed to  force  to  bury  their  wires,  and  tiually 
the  people  were  startled  one  morning  to  see 
in  thelr_new82apers  the  InteUIgettce  that  Jay 


Gould,  of    the   Western    Union   Telegraph 
Company,   against  which    the   law  author- 
izing the  subways   was   e8i>ecially  directed, 
had  acquired  a  controUiug  interest   in  the 
subway  company.    Something  like  this  may 
always  be  expected  to  happen.    It  is  similar 
to  what  railronds  have  always   done   with 
privat«  competing  canals.    Again,  it  is  seen 
that  one    private   company  is    not   strong 
enough  to  coerce  powerful  electrical  corpora- 
tions of  one  kind  and  another,  while  a  private 
monopoly    encounters  an    obstacle   in   the 
odium    which   always    attaches   lo   private 
moaopolies.    Mayor   Hewitt  speaks  of   this 
system  as  "certainly  very  objectionable."    It  | 
would  be  supposed  that  the  experience  of  ' 
New  York  would  b3  suffioient  to  convince 
any  one  that  it  is  the  function  of  a  dty  to  pro- 
vide electrical  subways.  These  can  readily  be 
made  to  yield  an  income  if  constructed  on  the 
plan   outlined   in   tbe  last  article  for  rapid 
triinsit.    Money  can  be  borrowed  at  three  per 
cent,  or  a  trifle  over  that,  and  then  a  rental 
can  be  collected  from  the  various  electrical 
companies  which  |vill  yield  more  than  the 
percentage   paid    by    the  city  on   borrowed 
money.    It  would  seem  that  very  moderate 
rentals  ought  to  yield  ttjn  per  cent,  on  the 
investment  in  a  city  like   Baltimore,  and  this 
would  soon  pay  off  the  principal  of  the  debt. 
Municipal  problems  must  now  be  left  in 
order  to  devote  the  remaining  papers  in  this 
series  to  other  subjects. 

Railroads  have  already  been  discussed  In 
one  paper  in  this  series,  but  certain  aspects 
of  the   problems   oonuecteiJ    wiih   railroads 
were  then  reserved  for  future  consideration. 
Probably  among  German  statesmen  of  re- 
cent years  no  one  has  had  a  hitrher  apprecia- 
tion of  America  than   Edward  Lasker,  and 
probably   no   one    has    entertained   general 
views  more  In  harmony  with  prevailing  sen- 
timent in  this  country.    It  will   be   remem- 
bered that  Congress   passed  resolutions  of 
sympathy  on  occasion  of  his  death, which  Bis- 
marck was  requested  to  transmit  to  the  Ger- 
man Parliament,  and  that  the  great  German 
statesman  refused  to  comply  with  the  request 
to  assist  in  honoring  his  bitter  political  oppo- 
nent.   Lasker  had  relatives  in  America,  and 
shortly  before  his  death  visited  our  country, 
and  in  various  ways   seems  to  have  acquired 
some  familiarity  with  our  Institutions.  I  met 
I  Lasker  lo  1880  In  Berlin  at  a  reception  given 
by  the  American  minister,  and    talked  with 
,  him  about  the  railroad  problem,  then  nearlng 
!  its  solution  in  Prussia  by  the  purchase  of  the 
private  roads.    Lasker   had  couducted  a  re- 
markable  parliamentary  investigation    into 
the  affairs  of  the  private  railroads  in  1873,  and 
expused  their  moral  rottenness  so  thoroughly 
that  public  opinion  began   to  react  in  favor 
of  state  railroads.    It  was  natural,  then,  that 
he  should  bo  found  on  the  side  of  the  govern- 
ment in  the  proposed  acqulsiilon  of  the  rail- 
roads, although  on  other  occasions  so  bitter 
an  opponent  of  the  government.  T  was,  how- 
ever, specially  struck  by  his   remark   about 
American  ruilroads.  He  8aid,'*Youio  America 
must  sooner  or  later  acquire  your  railroads 
and  place  them  under  public  mauagemeut.  Tt  . 
will  come  as  a  necessity,  for  natural  forces 
are  at  work  which  will  compel  you  to  take  this 
course."    This  would  have  been  a  less  sur- 
prising statement  from  other  members  of  the 
Parliament,  but  coming  from  him,  it  deserves 
careful  atteutionjL^Js  Lt.  true  that  forces  ar* 


^ 


iTat  work  whicb  will  brioff  abouc  public  owd- 
ersbip  and  tnaDaKemeDt  of  railroads  in  th« 
U (J tted  Stales?  Who  can  read  the  future? 
(Jertaioly  it  svemed  as  improbable  tea  years 
affo  that  a  mayor  of  New  yoric  ciiy  Bbould 
advocate  raunicipai  ownerdhip  of  a  eystem 
of  rapid  transit  as  it  now  does  th^t  a  Presi- 
dent of  the  United  States  should  ever  oast 
bis  inHueuce  in  favor  of   a  federal    railroad 

Isysiem.  It  must  be  taid,  too,  that  the  proper 
railroad  system  for  Germany  was  still  an 
open  question  ten  years  airo,  whereas 
now  it  is  no  lonirer  a  problem  of  the  day.  It 
is  settled,  and  the  settleraeot  is  indorsed  by 
an  overwhelming  majority  of  the  German 
people  of  all  shades  of  political  opinion.  One 
of  luy  professors  while  a  student  in  the  Uni- 
versity of  Halle  questioned,  in  1877,  seriously, 
the  expediency  of  state  railroad3,and  brought 
asramst  them  precisely  those  anruments 
which  we  hear  today  in  America;  but  actual 
experience  has  made  him  even  an  enthusi- 
astic adherent  of  the  Prussian  system,  wnile 
another  recent  and  competent  writer  says 
the  suitability  of  srovernment  for  railroad 
manajremeni  is  no  longer  open  to  question, 
since  it  has  been  settled  by  the  test  of  actual 
experience. 

These  facts  deserve  careful  consideration, 
and  while  the  correct  course  for  us  in  the 
United  States  is  by  no  means  clear,  it  seems 
like  a  wise  thins:  so  to  regulate  our  policy  as 
to  enable  us  to  give  that  shape  to  our  railroad 
system  in  the  future  which  will  best  answer 
the  demands  of   the   situation.    Those  who 
have  read  the  previous  articles  on  natural 
monopolies  will  at  once  be  able  to  state  what 
should   be  done  at  present.     It  is  a  very 
simple  thintr  to  limit  charters  and  to  provide 
for  the  acquisition  of  railroad  property  at 
their  expiration  at  an  appraised  valuation. 
It  forces   no   new  railroad  system  upon  a 
people,  but  simply  leaves  a  country  free  in 
the  future  to  determine  upon  a  suitable  policy 
without  well-nigh  insurmountable  obstacles 
of  vested  interests.    This  is  the  old  Jeffer- 
Bonian  principle.    It  leaves  each  generation 
to  manage  its  own  affairs  in  its  own  way.  We 
have    been   j^iving    perpetual   charters   and 
grants,  and  have  thus  squandered  tn«  rlghta 
of  those  who  are  to  come  after  us.    He  has 
read   history  to  little  purpose  who    cannot 
foresee   trouble   in   perpetual  grants.     The 
Almighty  has  set  a  limit  to  human  life,  and 
evidently  did  not  intend  that  the  dead  should 
by  acts,  which  profesa  to  be  forever  binding, 
rule  the  living  by  hampering  them  in  their 
freedom  of  movement.    Efforts  to  do  so  are 
not  likely  to  be  successful,  but  they  are  likely 
to   produce  endless    harm.    What  has    been 
trained  by   perpetual  grants     of     charters? 
Nothing,       while      It      is      easy      to      see 
how     many     existing     evils     would     have 
been     obviated    by    limited     charters.    All 
French   and  Austrian    charters  for  railroads 
expire  before- 1950,  and  no  one    yet  has  ever 
shown  that  this  limitation  has  worked   harm 
to  the  public,  while  it   is   certain  that  these 
two  countries  will  then  come  into  an  enor- 
mous possession.    France   expects  the  rail- 
roads to  pay  the  present  vast  public  debt. 
^     Limitation   of   charters   may  prevent  much 
I  stook-wfttering  and  issues  of  enormous  quan- 
ll  titles  of  bonds,  but  It  has  never  been  found 
T  to  check  entwrprise.    Suppose  we  had  limited 
I  charters,  and,  as  a  consequence,  the  Vander- 
I  bilts  and  Goulds  had  been  able  to  make  only 


tenortwelv;.  ....ilions  of  dollars  from  Tail-  I 
road  enterprise  instead  of  three  or  four  hun- 
dred millions,  would  they  not  still  have  been  j 
willing  to  go  on  with  their  rail- 
roading? How  oould  they  have  done 
better?  The  pica  that  suoh  vast  fortunes  are 
necessary  for  railroad  construction  is  dis- 
proved by  the  fact  that  excellent  railroads 
have  been  built  without  the  assistance  of 
men  of  enormous  wealth.  The  excellent 
railroad  system  of  Wurtcmberg  was  con- 
structed under  the  supervision  of  a  man  who 
received  some  13,000  a  year  for  his  services, 
and  seems  to  have  been  quite  contented. 

Much  that  has  been  done  cannot  readily  be 
undone,  but  there  Is  no  reason  why  future 
charters  should  not  be  limited  and  means 
provided  for  the  acquisition  of  the  railroads 
which  they  authorize,  should  it  be  thouirht 
desirable.  The  Western  Maryland  Kailroad 
deflires  to  lease  a  part  of  the  Cm  sapcake  and 
Ohio  canal,  and  perhaps  under  the  circum- 
stances nothing  better  could  be  done  than  to 
band  the  part  of  the  canal  in  question  over 
to  this  corporation;  but  can  any  one  give  any 
reason  why  the  lease  should  read  for  99  years, 
"renewable  forever?"  Is  it  not  enough  if 
we  bind  three  generations?  Great  teachers 
like  Bluntsohli  and  John  Stuart  Mill  said  we 
had  no  rlfrht  to  bind  more  than  one.  If  it  is 
provided  that  the  State  shall  at  the  expira- 
tion of  99  years  have  power  to  acquire  the 
property  at  an  appraised  valuation,  all  inter- 
ests are  satisfactorily  protected. 

One  diflBculty  in  tne  way  of  reforms  of  this 
character  is  that  a  class  of  men  among  us 
have  become  accustomed  to  bulldoze  the 
public.  So  in  many  iStates  railroads  would 
threaten  to  go  around  towns  unless  they  con- 
tributed for  their  construction.  It  is  largely 
through  such  means  that  our  local  political 
units  have  contributed  some  two  hundred 
millions  of  dollars  for  the  constuction  of 
private  railroads.  This  has  been  prevented 
by  constitutional  amendments  to  many  State 
constitutions,  which  forbid  any  public  con- 
tributions to  private  corporations.  This  has 
not  been  found  to  prevent  railroad  building 
but  it  has  forced  private  parties  to 
use  private  money,  and  then  left  them 
free  to  select  natural  routes.  If  our 
federal  constitution  prevented  any  charter 
for  any  purpose  whatsoever  from  being 
granted  for  over  fifty  years,  and  compelled 
the  reservation  of  right  to  repurchase,  and 
of  other  rights  in  behaif  of  the  general  pub- 
lic, it  would  be  a  reform  worth  talking  about. 
The  English  Parliament  has  gone  oven 
further  than  this  with  respect  to  certain 
classes  of  charters,  rendering  it  impossible  to 
grant  for  over  twenty-one  years. 

The  federal  government  ought  to  embrace 
every  opportunity  to  acquire  railroad  prop- 
erty—to be  leased.  perhap»,  for  the  present. 
What  proprlf'ty  was  ther*  in  the  construction 
of  the  Feciflc  railroads  at  the  public  expense 
and  then  turning  them  over  to  private  par- 
ties? Would  not  the  people  have  been  better 
served  If  irovernment  had  kept  the  riarht  of 
property  la  thoin  and  leased  the  roads  for  a 
limited  period,  under  stringent  conditions,  to 
the  highest  bidder? 

The  course  for  Congress  to  pursue  at  the 
present  time  in  regard  to  these  roads  is  suffi- 
ciently clear,  and  if  pursued  would  be  the 
first  step  towards  reform.  It  is  to  foreclose 
the  mortfl-aces,  acquire  .the  property  and  lease 


It  for  twenty  years.  Should  the  federal  ffov- 
ernmentfiruard  properly  all  public  property 
and  all  public  riffbts,  ii  would  find  itself  in 
the  possesglon  of  very  considerable  annual 
revenues  from  other  sources  than  forms  of 
taxation  which  involve  restrictions  on  the 
free  movements  of  commerce  and  Industry. 
A  federal  tax  which  is  needed  is  one  which 
will  yield  a  steady  revenue,  and  a  revenua 
which  can  be  increased  if  need  be.  A  tax  on 
the  jrross  revenues  of  all  railroads  engagred  in 
Interstate  commerce  mltrht  uot  be  an  unde- 
sirable form  of  taxation,  an4  mi^ht  remove 
the  possibility  of  a  recurrence  of  past  finan- 
cial embarrassments. 


PROBLEMS  OF  TeDAY. 


THE   INNOCENT  SHAREHOLDER. 


THE  PROPERTY  RIGHTS  OP  THE  PUBLIC. 


Prof.  Ely  Points  Out  How  the  People  are 
Forgotten  When  the  Corporations  are 
Concerned. 

[Written  for  the  Baltimore  Sun.1 

ARTICLE  XXIX.  ^ 

We  hear  much  in  these  days  of   the  inno- 
cent purchaser  of  railroad  shares  and  other 
property  with  which  fraud  has  been   con- 
nected.   The  innocent  shareholder  has  been 
made  to  cover  a  multitude  of  sins  in  the  dis- 
cussions   on   the   Pacific    Railroad    In    the 
United  State  Senate,  and  this  same  character  ; 
fieured    largely   in   the   arguments   on   the  I 
Jacob  Sharp  Broadway  franchise  before  the 
Court  of    Appeals  in  New  York  State.    It 
must  bo   acknowledeed    that   the   innocent 
stockholder,  especially  in  the  person  of  the 
widow  and  orphan,  has  done  excellent  serv- 
ice in   the   past,  and  Is  likely    to    become 
more  prominent  in  the  future.    The  Court  of 
Appeals  rer.'dered  a  decision  in  the  Broad- 
way street-car  case  which  must  strike  the 
economist  aa  a  little  startling:,  and  which  I 
mil  venture  to  assert  will  come  to  be  recojf- 
cized  as  bad  law  inside  of  twenty  years. 

The  charter  was  revoked,  but  the  franchise 
and  all  the  rig-hta  of  this  corporation,  after  it 
had  met  with  log-al  death,  p  issed  over  to  the 
directors  of  the  railroad,  to  be  used  for  the 
benefit  of  the  various  claimants,  and  of 
course  claims  for  all  it  was  worth  had  been 
established  at  the  earliest  possible  moment. 
The  people  grot  the  law— the  shell  of  the  nut 
— but  the  thieves  arot  the  property— the  meat 
of  the  nut.  History  will  surely  have  some- 
thing to  say  about  this  lepal  hair-splittinsr. 
Suppose  thf?  public  has  rights  like  private  in- 
dividuals, what  must  necessarily  result  there- 
from? Those  who  receive  prooerty  stolen 
from  the  public,  must  bs  treated  like  any 
other  innocent  receivers  of  stolen  coocls.  We 
may  feel  very  sorry  for  them,  but  we 
take  the  property  away  nevertheless, 
and  restore  it  to  the  ricrhtful  owner. 
But  let  us  consider  the  case  of  the 
innocent  shareholder  a  little  more  carofuUy- 
A  recovery  of  public  property  miRhi  work 
hardship  in  some  cases,  but  is  the  Innocent 
shareholder  the  only  person  to  be  considered? 
By  no  means— the  millions  comprised  in  the 
term  "the  sreneral  public"  are  aeain  for- 
Rotten.  A  very  few  persona  mi»ht  have  suf- 
fered  If  the    property    which    Jacob    Sharp 


stole  had  been  restored  to  its  riphtful  owners, 
the  public,  but  over  a  million  people  suffer  In 
New  Yorfc  on  account  of  this  theft,  and  some- 
of  them  are  widows  and  orphans  and  day- 
laborers.  No  one  will  for  a  moment  deny— 
provided  he  knows  anythinj?  about  the  facts 
at  all— that  passengers  can  be  carried  at  a 
large  profit  on  Broadway  in  New  York  city 
for  three  cents  each.  The  franchise  could 
have  been  sold  for  a  small  percentage  of  gross 
receipts  on  condition  that  passengers  should 
be  carried  for  three  cents.  This  would  have 
been  a  slight  relief  to  the  taxpayer  and  a  very 
great  one  to  all  poor  people.  Many  a  poor 
widow  and  orphan  and  thousands  of  worK- 
ingmen  trudge  the  streets  of  New  York 
wearily  for  miles  today  who  might  ride  if 
fares  were  three  cems.  Every  day  of  tho 
year  sorrow  and  hardship  are  inflicted  upon 
thousands  of  innocent  and  worthy  people 
because  they  were  forgotten,  while  a  few 
other  innocent  people,  receivers  of  stolen 
goods,  were  remembered.  I  submit  that  this 
is  an  iniquity.  Those  who  bad  money  enough 
to  buy  shares  and  bondswere  not  the  mosthelp- 
less  class  in  the  community.  It  is  easy  enough 
for  one  who  thinks  the  rights  of  the  many 
equal  to  the  rights  of  tho  few  to  say  what 
ought  to  be  done.  It  is  to  defend  public  prop- 
erly just  as  private  property  is  defended.  This 
is  the  way  to  root  out  the  anarchists,  and  the 
only  way  to  make  a  permanent  impression  on 
them.  Not  an  abolition  of  property  rights  is 
wanted,  but  an  extension  of  property  ritrhts 
and  vigorous  measures  to  defend  the  rights, 
of  the  property  of  the  many  as  well  aa  of  tho 
few.  Property  is  sacred,  and  when  all  prop- 
erty, that  of  the  public  as  well  as  at  the  in- 
dividual, that  which  resides  in  one's  own 
person,  one's  strength— the  labor  power  and 
the  health,  bodily  vigor  and  mind  of  the 
workingman — ire  properly  guarded,  attacks 
on  private  property  need  never  be  dreaded. 
So  long  as  public  thieves  can  crawl  behind 
the  intoceut  stockholder  and  place  the 
widow  and  orphan  between  themselves  and 
public  wrath,  public  property  has  no  ade- 
quate defense,  and  can  have  none,  because 
those  who  get  it  at  once  begin  to  dispose  of 
it.  If,  however,  we  as  a  people  begin  to 
show  a  higher  appreciation  of  our  own 
rights  and  treat  our  enemies  wi  h 
less  gentle  consideration,  people  will  hesitate 
about  purchasing  property  fradulently  ac- 
quired, and  this  will  produce  a  wholesome 
habit  on  the  part  of  purchasers  of  stocks  and 
bonds  of  making 'inquiry  about  methods 
whereby  alleged  rights  were  secured.  The 
proper  method  for  protecting  really  innocent 
purchasers  of  stocks  and  bonds  is  easy 
enough.  It  is  to  provide  civil  as  well  as 
criminal  remedies  against  the  thieves.  It  is 
not  diflicult  to  give  those  who  suffer  at  the 
hands  of  a  man  like  Jacob  Sharn  ample  civil 
remedies  whereby  they  can  recover  damages. 
It  is  a  thing  which  has  already  been  done  in 
other  places,  and  for  which  precedent  in 
somewhat  similar  cases  can  probably  be 
found  in  the  legislation  of  every  American 
State.  I  think  the  Et)giiBh  law  of  corpora- 
tions already  provides  ample  remedies  for 
a  case  li^e  that  of  Jacob  Sharp,  and  I 
am  very  sure  that  the  German  law— the 
latest  and  most  admirable  law  for  private 
corporations— is  all  that  coula  be  desired  in 
this  respect.  As  for  the  rest,  people  will  soon 
become  disgusted  with  the  "widow  and  or- 


pdan"  plea,  for  U  ia  made  to  do  duty  so  often  ; 
by  scoundrels.    It  haa  been  said  we  should 
nhtpayofC  tbe  public  debt  of    the  United 
States  because  the  widow  and  orphan  might 
suffer,  and  a  irood  deal  of    pathc^a  haa  been 
evolved  on  their  account,    Henry  C.  Adams, 
however,  tikes  up  tbe  public  debt  and  ana- 
lyzes It  in  bis  work   "Public    Debts."     He 
shows  that  out  of    $(564,000,000  of    retflsterod 
bonds  $410,000,000  are  held  in  sums  of  $50,000 
and  over,  and  he  expresses  the  not  unnatural 
conclusion,  "It  seems  a  Utile  lualcrous  to 
urjje  the  mainienanoe  of  a  federal  debt  as  a 
measure  of  charity  to  dependent   persons." 
Over  seven  y-three   thousand    persons  held 
rcRlsterod  bonds,  but  of    these   about   1,500 
hold  two-thirds  of  the  total   amount.    It   Is 
not  enough  for  corporations  to  come  before 
the  public  wlih  statements  of  the  number  of 
holders  of  stock  and  their  wide  distribution. 
We  want  to  know  more  than  that.    We  want 
an  analysis  of  the  wealth  of  the  corporation 
in  question,  and  if  ihe  information  is  to  be  of 
value,  we  must  be  told  just  what  percentaRe 
of  stock  is  owned  In  small  amounts,  what  in 
moderate  quantities,  and  what  percentage  in 
large  blocks.    Should  one  ol   our   States   or 
our   federal    go\%rnment    begin    from    ihis 
time  forth  a  vigorous  defease  of  public  prop- 
erty  and   public   rights,   a   few  persona   of 
undoubted    innocence    and   integrity  would 
suffer    at     first,     but    only    at    first,     for 
people    would     soon     be     more     circum- 
spect than  heretofore  in  purchases  of  stocks 
and  bonds;  and  as  for  the  few  real  sufferers. 
we  could  well  afford  to  indemnify  them  out 
of  the  public  purse.    As  this  would  be  bad 
policy  on  many  accounts,  it  would  be  better 
to  raise  money  needed  for  this  purpose  by 
private  and    voluntary  offerings.    When  it 
happens   that   members   of    the   dependent 
classes,  lik«  widows  and  orphans,  are  injured 
by  a  recovery  of  public  property  which  haa 
been  stolen,!  am  willing  to  put  my  name  down 
o  nasubscripiion  list  for  their  relief  for  a  gen- 
erous sum,  and  to  use  all  the  Influence  I  have 
in  inducing  others  to  do  likewise. 

ABTIFICIAI.  MONOPOI^IES. 

The  Standard  Oil  Company  as    an  Illas- 
tration  DiscusBed  by  Prof.  Kly. 

[Written  for  the  Baltimore  Sun.] 

ABTICLK  XXX. 

The  man  of  one  idea  is  in  some  respects  a 
useful  man,  for  he  sees  a  portion  of  the  truth, 
and  the  inten.-ity  of  his  conviction  in  regard 
to  its   importance  leads   him  to  become  an 
apostle  on  its  behalf.    Tariff  reformers  who 
find  an   explanation  of  all   the   evils  with 
which  America  is  inflicted  m  pnjtoctionism 
are  doubtless  blind  to  the  re^  signiflcance  of 
innumerable  classes  of  phenomena,  but  they 
are  often  oil  this  account  the  more  ardent  in 
the  propagation  of   the  truth  which  they  do 
see     Doubtless  fanatics  are  needle  1  to  help 
on  in  tho  world's  work.    Neverthele-ss,  one- 
sided advocacy  of  true  principles  has  its  dis- 
advantages, for  an  exposure  of  tne  exaggera- 
tions  into   which   men    are   thereby    drawn 
leads  many  to   overlook  tho  kernel  of  truth 
about  which  so  much  error  has  k'athered.  6r, 
to  use  a  different  figure,  those  who  perceive 
the  vast  amount  of  chaff  which  incloses  the 
wheat  are  too  often  inclined  to  reject  th« 
chaff  and  the  wheat  alike  rather  than  to  take  j 
tbe  trouble  to  separatethe  two. 


^ 


Much  nonsense  Is  wri  .oout  the  tariff  \ 

and  monopoly,  and  the  Chicago  gas  trust  has 
even  been  connected  with  protectionism,  with 
v\hich  in  reality  it  has  about  as  much  connec- 
tion as  the  rainfall  of  Baltimore  with  the 
length  of  the  riv-  '  •.  It  seems  to  me  de- 
sirable for  us  to  !_.._.  -lear  notions  about  the 
actual  workings  of  a  protective  tariff,  and 
the  consequences  which  li>  renlity  may  be 
attributed  to  it.  I  think  that  we  will  thus,  on 
the  whole,  contribute  vastly  more  to  true  and 
permanent  progress  than  by  a  blind  advocacy 
of  we  know  not  what. 

It  has  been  attempted  In  previous  articles 
to  show  that  certain  pursuits*  are  In  their 
own  inherent  nature  monopolies.  These 
have  been  enumerated  and  described.  They 
have  become  of  vast  Importance  during  tho 
pist  fifty  years,  but,  nevertheless,  thoy  in- 
clude only  the  minor  part  of  our  industrial 
life.  The  great  majority  of  men  are  engaged 
in  pursuits  which  are  n  )t  natural  tnonopolies, 
and  if  these  men  contrive  to  make  of  them 
business  monopolies,  it  shows  at  once  that  f 
etjinehing  is  wrong.    Commerce,  agriculture,  \ 

mining  and  manufacture  arc  only  In  rare  an<i 
exceptional  cases  natural  monopolies.  Yet 
we  eee  a  great  many  monopolies  which 
may  be  placed  in  one  of  these  classes.  They 
are  all  artificial  monopolies,  and  consequently 
are  evils  which  should  be  suppressed.  They 
violate  the  fundamental  prlncioles  of  oux  ex- 
isting social  and  economic  order,  and  are,  as 
has  been  already  stated,  socialistic  and  revo- 
lutionary. 

There  are  two  causes  of  artificial  monop- 
olies. The  first  is  legislation  in  beha'f  of 
men  engaged  in  a  pursuit  not  a  natural 
monopoly.  The  second  is  the  connection  of 
a  pursuit  not  a  natural  monopoly  with  one 
which  is  a  natural  monopoly,  so  that  the 
two  become,  to  a  certain  extent,  one.  I  lay 
it  down  as  a  general  proposition  that  arti- 
ficial monopolies  are  buslue8?e8  which  have 
become  monopolies  only  by  an  alliance  with 
a  business  which  Is  a  natural  monopoly. 
What  legislation,  as  seen  in  a  protective  tariff, 
does  is  simply  to  aid  this  alliance,  to  render 
It  easier  to  form  it,  and  to  make  it  more  Im- 
pregnable when  formed.  He  who  tbinKS  that 
tariff  reform  alone  would  remove  monopolies 
and  trusts  has  not  grasped  the  A 
B  C  of  political  economy.  I  ask  the 
readers  of  Thk  Sun  to  remember  this. 
I  believe  that  political  economy  is  suffi- 
ciently advanced  to  enable  me  to  predict  this 
with  almost  a"*  great  certainty  as  an  astrono- 
mer can  predict  a  coming  eclipse,  and  I  am 
willing  to  take  up(tn  myself  whatever  risks 
to  my  reputation  as  a  scientific  man  are  In- 
volved in  this  prediction.  A  reform  in  the 
field  of  natural  monopolies  must  accompany 
tariff  reform  in  order  to  uproot  artificial 
monopolies. 

Tho  transfei  of  bagsrage  from  houses  and/ 
hotels  to  railroad  stations  and  from  railroaa 
stations  to  houses  and  hotels  is  not  a  natural 
m-  v.  but  it  is  a  business     ■■' in  every 

one    .   uur  great  cities  has  b.  a  partial 

monopoly.  How  did  tho  business  beconio  an 
artificial  monopoly?  How  has  competition 
been  well-nigh  cruphod?  Uucause  in  eacn 
gieat  city  one  or  two  companies  form  alli- 
ances with  railroad  companies  and  obtain  ex- 
clusive privileges  on  the  trains  and  in  the 
stations,  tho  railroad  companies  obtaining 
some     quia    pro    guc^the    railroad     com- 


/ 


I  padies  or  'some  of  their  officials,  for^ 
I  think  it  is  not  so  often  the 
stockholder  who  receives  the  benefit  as  vari- 
ous oflacials  who  are  let  in  on  the  around 
floor.  Thus  it  was  that  in  1879  the  Erie  Rail- 
road was  found  covered  with  barnacles,  but 
on  the  whole  there  has  been  an  improvement 
in  this  respect  in  recent  years.  But  this  la 
merely  said  "by  the  way." 

As  railroads  are  natural  monopolies,  those 
dependent  upon  them  are  often  made  monop- 
olies by  their  action. 

The  Standard  Oil  Company  serves  as  an- 
other fllustration.  That  obtained  a  monopoly 
throufirh  an  alliance  witn  the  railroads  of  the 
country,  and  this  srave  it  special  freight  rates 
which  DO  one  else  could  secure..  The  report 
of  the  special  committee  appointed  to  in- 
vestigate the  railroads  in  New  York  in  1879 
showed  that  the  Standard  Oil  Company  had 
received  in  rebates  ten  millions  of  dollars  in 
eighteen  months.  It  was  impossible  for 
competitors  to  stand  up  B{rainst  such  fritrht- 
f  ul  odds.  Quite  recently  a  railroad  in  Ohio 
was  found  to  have  given  the  Standard  Oil 
Company  an  advantage  of  three  hundred  and 
fifty  per  cent,  over  George  Rice,  of  Macks- 
bur^  and  Marietta,  their  chief  competitor  in 
that  part  of  Ohio.  Itwas  this  alliancewith  a  nat- 
ural monopoly,  and,  his  alone,  which  enabled 
the  Standard  Oil  Company  to  secure  a  mo- 
nopoly. The  competitors  of  this  concern 
have  not  retired  before  its  superior  business 
ability,  but  before  its  cheaper  freight  rates. 
It  is  by  pursuing  a  shrewd  policy  in  this 
respect  that  Mr.  Rice  has  been  able  to  main- 
tain an  existence  as  an  oil  refiner.  Wher- 
ever f  relgat  rates  are  too  much  against  him 
he  retires  from  the  field  and  seeks  another 
market  where  he  can  contend  on  an  equal 
footing.  The  competitors  of  the  Standard 
Oil  Company  have  never  complained  of  the  j 
superior  skill  or  superior  business  ability  of 
the  Standard  Oil  men,  but  of  the  favoritism 
which  has  been  shown  them  by  the  railroads; 
and  how  close  the  alliance  is  can  be  seen  In 
freight  classifications  and  changes  therein  in 
order  to  secure  special  favors  for  the  monop- 
oly, and  by  hook  and  crook  to  make  competi- 
tors ani  impossibility. 

The  curious  will  find  the  story  well  told 
under  the  title  of  "A  Commercial  Crime,"  in 
"Hudson's  Railways  and  the  Repiblic." 

The  production  of  coal  furnishes  another 
Illustration.   This  ought  not  to  be  a  monopoly, 
but  as  to  anthracite  coal  it  has  become  such 
by  its  connection  with  railrc^ad  compnnies.  A 
group  of  men  intereste  i  in  mines  control  the 
roads,  and  are  thus  able  to  dictate  to  other 
operators  and  rule  ihem  with  a  rod  of  iron, 
which  renders  the  trades-union  tyranny,  of 
which    we    hear     so     much,     insignificant 
in     comparison.     Men     living     in     Mary- 
land   know   full    well    that    they    are    not 
at    liberty   to    pay   their    men   what    they 
will  to  mine  coal  where   they  will,  and  in 
quantities  which  suit  their  own  convenience. 
They  must  do  what  they  are  told  to  doorsuffer 
financial  ruin.    A  pursuit  nor  a  natural  mo- 
nopoly  has   become   an   artflclal   monopoly 
through  an  alliance  with  a  business  on  which 
it  depended,  and  which  is  in  its  own  nature  a 
monopoly.     It  is  on  this  account  that   the 
constitution  of  Pennsylvania  renders  it  ille- 
gal for  a  railroad  to   engage   in   any   other 
lines    of     business    than    those    connected 
with      transp  irtation.      It     is     an    entirely 
_gorrect      poli    ■       '  >     demand    ,^that 


railroads  shall  be  held  riaidly  tc  their  own 
proper  functions,  and  that  they  shall  serve 
all  alike  in  order  to  avoid  artificial  monono- 
lies.  This  was  also  the  purpose  of  the  Inter- 
state commerce  law.  The  aim  is  correct,  but 
there  is  no  reason  to  think  that  the  purpose 
of  the  Pennsylvania  constitution  or  the  inter- 
state commerce  law  will  be  accomplished  by 
present  methods.  The  State  constitutional 
provision  and  the  federal  law  are  of  value  as 
establishing  a  principle,  but  that  alone  is  their 
chief  sigiiiflcance.  ^v 

There  may  be  rare  and  exceptional  cases  in 
which  the  taritf  alone  will  enable  men  to 
secure  a  motiopoly,  but  the  approved  method 
is  to  get  control  of  the  home  market  by  alli- 
ances with  natural  monopolies,  and  then  to 
keep  foreign  competition  out  by  a  high-tariff 
wall.    The  tSiUEP  handJjT_hand.  _ 

PROBLEMS  OF  TODAY. 


tne 


THE    PROTECTED   IN  POLITICS. 

GOVERNMENT  BY  SPECIAL  INTERESTS, 

How  a  Protective  Tariff  Corrupts  Politics 
Discussed  by  Prof.  Richard  T.  Bly. 

[Written  for  the  Baltimore  Sun.l 

ARTICLK  XXXI. 

Government  is  cieated  to  promote  the  gen- 
eral welfare,  anl  when   it  is  u-el  to  advance 
special  interests  which  are  nor  at  the  same 
time  fireneral  interest^,  it  is  perverted  from 
itsorii^inal  purpose.    Our  federal,  Stae  an  ' 
local  governments  ar"    now   com  rolled    by 
men  who  hold  their  offices  in  trust  for  pow- 
erful  private  partes,  and    they  view  public 
measures,  not    from    the   standpoint  of   the 
general  puiilic,  but  from  the  standpoint  of 
thost^  in  whose  employ  they  are.    This   has 
b:>en  previously  mentioned  in  this  (series  of 
Mrtiolfes  and  reed  not  be  enlarged  upon,  for 
it    is    Buflicleiitly   obvious    to    those     who 
"have  eyes    to    see."      O.ie   proof    of    this 
is   .  the     way   in     which     leirislativo   favors 
are    exchano-ed.      A     pr  mises    to   support 
ti's  bill  if  B  in  turn  will  vow  for  some  meas- 
u  e  which   interests  A.    This  occurs  daily, 
and  would  of   course  be  an  impossibility  if 
A  and   B  both  voted    simply   for  measures 
which  they  reirarded  as  d^sizned   to  benefit 
the  public.    Another  evidence  of  the  influ- 
ence of  private  interests  i^  seen  in  the  ques- 
tion  so   often   asked    by   legislators  of   the 
powerful   when    they    visit    the    lei-islativc 
^jalls.  "Well,  what  can  I  do  for  you   today?" 
The  power  held  as  a  trust  f.  r  the  people  is  in 
return   for  some   bribe,    direc    or   indinct, 
placed  at  the  disposal  of  a   private    person. 
The  lobbies  which  exist  everywhere  are  a 
further  proof.    These  are  maiotalned  to  in- 
struct legislators  in  regard  to  private  iptei- 
ests    and     to    make    it    worth    while    for 
them    to   help  forward     some    scheme    for 
pl'indering    the    people.     Again    and    again 
have  citizens  found  it  an  absolute  impossi- 
bility t>  secure  any  attention   for  measures 
designed  simply  to  benefit  the  general  public. 
Leirigl  itures  and  lity  councils  will  not  even 
take  time  to  give  them  superficial  attentii)n. 
Consequently  the  practical  man  does  not  go 
in  a  siraightf.irwarJ  ma  mer   to  anyone  of 
our  legislative  bo  lies  and  say:    "I  have   de- 
vised plans  for  public  iaiprovements  which 
will  be  of  great  benefit  to  our  city,    and   I 
desire  to  explain  them  to  you."    On  the  d  n- 
trary,  he  goes  t>i  some  one  who  has  influence 
and  brings  hi-^  plans  forward  in  this  indirect 
manner.  Jt  jook  a  scandal   ]\jfj^  the  Jacob 


X' 


i 


>haTv  c&ae  to  iovov  a  bill  throuff^  the  New 
York  L'trisiature  readerinjr  the  sale 
of  street-car  franchnes  compulsory,  and 
when  in  ihe  Leirislaiure  It  was  sug- 
gested that  charters  be  limited  as  to 
ientrih  of  time  as  In  Louisana,  the  Influence 
of  boodle  was  too  atronsr.  I  sar  this  b  cause 
I  hold  that  there  was  no  laoK  of  kn  )wlo  (fe 
tiS  to  correct  me  hods  of  dealincr  with  the 
problem.  It  Is  simply  Impossiblb  to  find  any 
tfiounds  for  unH'Tiited  street-oar  franchl-es, 
and  had  public  interests  been  d  cislve  the 
frunchisea  would  have  bee  i  limitod  in  time. 
We  have  the  fact  of  srovernmo  t  by  special 
interests  knowa  to  all  men.  Now  what  is 
the  cause? 

The  more  carefully  I  examine  the  facta  of 
the    case,  and  the    more  I  reflect  upon  the 
nature  of    the  pn.blem,  the  more  inclined   I 
feel  to  apree  with   those    who   find   a   chief 
cause  in  the  protective  tariff.    The  moment  a 
tax  is  placed  on  imported  troods  that  moment 
those   enfirae-  d    In    its   production   at  home 
have  an  interest  In   the  control  of  leffisiation 
to  suit  their  private  ends.    It  is  unavoidable. 
The  tempation  to  do  wrong:  is  absolutely  in- 
sepirabi.-    from   protectionism.    Thosa  who 
are  protected  form  an  association  and  keep 
nsrents  at  Washintrton,  whose  business  it  is 
on   the   one    hand  to  raise  the  tariff,  on  the 
other   to   prevent   a   reduction    in    the  tax 
on  imported   commodities.    Special   private 
interests   are    thus   created    by    legislation, 
and    these     make     free     use     of      money. 
A^sesments    are    levied    on     producers    of 
taxed  commodities   to  support  a   lobby   at 
"Wasblngion,  and  in  cenaii  branches  of  pro- 
ductions manufacturers  have  come    to   look 
uix)n  these  assessments  as  a  mere  matter  of 
course.    The  money  goes  to  Wasbinp-ton,  and 
no  account  is  ever  rendered  of  the  mode  in 
which  it  is  expenied.    Legislaiors  get  in  the 
habit  of  looking  for  remuneration  of  some 
kind  for  the  performatice  of  their  legislative 
functions,  ad   the  most  unscrupulous   use 
pflBce  for  what  it  will  bring.    There  are  two 
ways  in  which  money  qaii  be  made  by  legisla- 
tors.   They  can  receive  money  for  their  aid 
in     gettitisr    throusrh    bills    in     which    pri- 
vate  parties   arQ   interested,  and    they    can 
bring     forward     unjust     bills    designed     to 
Injure       private      parties       purpose  y      to 
be     bought     off.      Proper     bills,    designed 
to  guard  the  public   intQrests,  are  also    fre- 
quently brouKbt  forward,  and  then  a  shrewd 
lejrisiator  can  ob  ain  credit   with  the  public 
for  his  service  at  the  same  time  that   he  re- 
ceives boodle  for  secretly   killing   his   own 
bill.    There  is  every  reason  to  believe  tnat 
such  things  happen  at  Albany,  but  of  course 
not  in  connection  with  the    tariff.    The  cor- 
ruption of  State  Legis  aiures  and  municipal 
councils  is  the  work  of  those  in  possession  of 
natural    monopolies.     The  natural  monopo- 
lies must  be  Qontr  lied,  because  it  has  been 
demonstrated  by  actual  experience  that  it  is 
impossible  to  turn  over  irunsportation.  lltfht, 

vater  and  the  like  to  private  corporations 
without  regulation.  Now  the  moment  regu- 
lation begins  a  diversity  of  interest  between 
the  public  and  private  parties  is  created,  and 
a  wide  door  Is  opened  for  corruption. 

It  is  easier  to  see  this  in  a  small  town.  Let 
UB,  therefore,  acrain  take  the  case  of  water- 
works in  two  place-i  already  mentioned. 
Fredonla,  New  York,  has  public  works.  No 
corporation   exists    to   o Trupt    tho    village 


irtstees;  no  p  )werful  private  Interests  ad-»  1 
vers©  to  those  of  the  general  public  exist,   I 
The  only  source  of  corruption    iif  the  civil 
service,  and  the  appointment  of  one  or    two 
officials  has  never  been  found  to  De  appreci- 
ably demoralizing.    Let    U8    leave  Fredonla 
and  go  to  Jamestown   in  New  York,  where  a 
private    water   company   exists.    This  corr- 
pany  has  from  the  start  been  engaired  in  litl» 
jration  with  tne  city.    N  »w  can  «nv  one  fail 
to  see  bow  ihia  at  once  introduces  a  corrupt 
and      debasing:      influence      in     muaicipAl 
politics?      What      has      taken      place      in 
Jamestown       I      will      no-       attempt      to 
say;  but  the  usual  course  Is  for  the  private 
corporation  first  to  get  control  of  the  pres9« 
or  a  portion   of  It.  then  to  send  men  to  the 
council  to  decide  all  disputed  quustions  be-    . 
tween  the  corporation  and  the  city  I »  favof 
of  the  former,  also  to  effect  a  repeal  of  any 
reserved   public   rights.      The    corporHtionp 
have  a  tremendous  advantage  because  they 
are  utterly   unscrupulous.     Parties    are   to 
them  merely  tools.    "In  republican  districts    ' 
I  am  a  republican,  in  democratic  districts  I    | 
am  adem<  cr.t."  is  the  assertion  of  a  notori- 
ous railr  aa   president.     I    might   name  a 
Western  city  in  which  there  is   reason    to 
believe  tnat  the  street-ear  corp  rations  elect 
every  municipil  oounoilor,  whether  a  demo    ■ 
orator  republican,  because  in  all  the  wards  j 
they  control  both   parties.    When    I  used  to 
live  in  New  York  city  I  was  in  a  posltio  i 
to  know  that  nothing  was  so  effectual  in  se- 
curing employment  on  the  street-car  lines  as 
"a  political  pull,"  and  there  is  reason  to  sup- 
pose that  the  same    condition  of  things  ex- 
ists  today.    The   street-car  conductors  and 
(fivers   were   practically  in  the  employ  of 
politicians,  and   were  a  worse  cause  of  de- 
fBoralizationibanthepamenumbr  of  munic- 
ipal employes,  as  there  was  not  the  ;  same 
opportunity  for  exposure  and  improvement 
In  methods  of  appointments. 

3oth  cans '8  of  corruption  and  eovernment 
by  sped  1  interests  are  something  insepara- 
ble trom  present  policy.  What  should  be 
done  with  respot  to  natural  monopolies  has 
alreaiy  been  explained  tt  sufBcient  lendfth. 
It  may  be  well  to  add  a  word  ahout  tariff 
reform. 

Did  free  trade  already  exist,  there  is  reason 
to  believe  that  it  would  be  a  «ood  thln»f  for 
the  country.  We  have  superior  advantages 
over  other  countries,  and  the  strontro-it  is  not 
the  one  to  suffer  in  competition.  Fanners 
and  workingmon  arc  the  last  ones  to  stain  by 
protection,  and  I  have  no  doubt  thai  both 
would  gain  were  trade  as  free  between 
Europe  and  America  as  between  our  States. 
However,  the  fact  of  the  tariff  exists,  and 
the  fact  is  of  vast  imp  lit  nee.  Our  industries 
have  grown  up  unier  it  for  over  seventy 
years,  and  have  itecome  moro  or  less  adjusted 
to  an  artiflolal  s'aie  of  thintrs.  Good  f  ith 
requires  that  wo  should  in  dealinflr  with  manu- 
facturers bear  this  fact  in  romd,  and  move 
carefully  in  readjusting  trade  relations. 
This  is  not  saying  that  we  should 
jlo  nothing,  but  simply  that  rash. 
hasty  movement  shoul  i  be  avoided.  No  one 
has  received  any  pleage  that  tariff  aws  would 
not  be  changed,  yei  it  seems  only  fair  that 
those  who  have  reli  d  upon  a  traditional 
policy  should  have  a  little  time  in  which  to 
adjust  themselves  to  a  new  state  of  tilings. 
W  hile  it  is  true  that  the  fears  entertained  in 


many  quarters  in  re«:ard  lo  the  effects  nf 
l?V.'''T^  tariff  reform  are  ^reatfyeluef 
jerated,  there  can  be  no  doubt  that  immel 
diat^  free  tride  would  ruia  a  D-no,i  ^ 
mauufacturers.  Now  ou/iidustS' ifTh's 
one  m?  V'^'"*'"'  ^"'^  y°"  cannot  .Jure 
uuuy.    ihia   i3  -j^eji    established.    Iidustriai 

facttir^'^^^'"^^"'-    ^°  injuryto  Z?^i 
f jcturers  may  mvolve  bank.,  tbese  In  turn 

Farmers  have   nothing  whfltpv#:.r  ♦«  h^ 

rr-STr^ """•  *'"■»'  " "'vlZrlt tariff 
reform  free  raw  raaterials  will   be  likPirl 
benefit  the  general  Public  and  to  ^roaui.  no 
iDdu8.nal  Shock.    Free  raw  material  should 
be  accompanied    by  corre.podiX  lower 
dunes  or  even  by  duties  a  little  more  tr«n  ' 
proportionately  lower.  Whenever  aTar  fcle 
'8  place>i  on  the  free  list  it  is  a  clear  Ziu  and 
oiie  temptation  to_^oyernment  by  spediui 
te^ests   i8    remoVid.     A    steady?  pSterft^ 
effort  should  bo  made  to  tax  as  few  thinps  as 
possible,  as  thus  interference  with  tr.de  and 
temptation     to     corruptlo:.     will     be    re-  i 
duced.    A    fruitful     gource    of    fraud    and 
injustice  as  b.tween  various  p^rts  is  caqsed 
Dy  difficultipi  attendinir    valuations.    It  is 
desirable  to  simplify  administration   bv  sub- 
stituting: in   every  praciicable  case  ppeciflc 
ror  ad  valorem  duties.    For  the  re^t,  the  bill 
revlslm?  the  tariff  prepared   by  the  majority 
or  the  ways  and  means  committre,  while  not 
all  that  could  be  desi-ed.  seems  to  be  a  move- 
in  the  rifirht  direction,  and  one  which  de8>  rves 
tho  earnest  support  of  tho^e  who  are  chiefly 
coucerDed  at  out  the  ireneral  welfare. 


14  DAY  USE 

RETURN  TO  DESK  FROM  WHICH  BORROWED 

LOAN  DEPT. 

This  book  is  due  ofl  the  last  date  stamped  below,  or 

on  the  date  to  which  renewed. 

Renewed  books  are  subject  to  immediate  recall. 


LD  21A-50m-4,'59 
(A1724sl0)476B 


General  Library     . 
Uaiversity  of  California 
Berkeley 


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i\^-a^^ffe. 


